Kingfisher shares rose on Tuesday after it raised its full-year profit guidance following a solid first half, as margin gains and its trade and digital businesses drove profit growth despite broadly flat underlying sales.
The owner of B&Q and Screwfix said adjusted pre-tax profit rose 9.9% to £404m in the six months to 31 July, helped by a 70-basis-point improvement in gross margin, tight cost control and a £14m one-off business rates refund.
Stripping out the refund, profit was up 6.1%. Like-for-like sales edged up just 0.3%, while total sales, including its marketplace, rose 1.6%.
The market cheered the group’s ability to carve out higher profits despite relatively flat revenue, and shares rose 9% on Tuesday morning.
Adam Vettese, market analyst for etoro, says: “A sharp jump at the open tells us that investors had been waiting for permission to believe the self-help story. Kingfisher did not deliver a housing boom or a sudden rush of weekend warriors into B&Q. It delivered something more useful in this market; proof that margins, mix and cost control can still grow profits when like-for-like sales barely twitch.”
Screwfix was the standout, with like-for-like sales up 5.6%, and the group also gained market share in Poland and Spain. Its trade and e-commerce businesses each grew 16% excluding Screwfix, and marketplace sales jumped 42% to £372m.
The weaker spots were B&Q, where like-for-like sales fell 2.9%, and France, both hit by heatwaves that kept shoppers away and delayed bigger building projects.
On the strength of the performance, Kingfisher raised its full-year guidance for adjusted pre-tax profit to between £595m and £635m, from £565m to £625m, and lifted its free cash flow forecast.
It held its interim dividend at 3.8p and is continuing a £300m share buyback, while adjusted earnings per share rose 16% to 17.8p.
The Kingfisher share price touched some of the highest levels since the US and Israel launched attacks on Iran, following today’s update suggesting there could be more to come from shares if the macro backdrop improves.