Kingfisher issues another profits warning as 2023/24 earnings slump

25th Mar 2024 07:04

(Sharecast News) - B&Q owner Kingfisher on Monday warned current-year profit would fall short of expectations after it posted weaker earnings for 2023-24 as the home improvement market continued to lag behind demand for housing.

The company, which also owns Screwfix along with the French chains Brico Depot, Castorama and Koctas in Poland, said it expects adjusted pre-tax profit of £490m - £550m, lower than forecasts of £560m and compared with the £568m it reported for last year, down 25% on 2022/23.

Like-for-like sales in the first quarter of the 2024/25 fiscal year were down 2.3% year-on-year, although Kingfisher reported an improved sales trend in the UK and Ireland, France and Poland compared to the previous three months and better product volumes.

Chief executive Thierry Garnier said Kingfisher remained "confident in the attractive growth prospects of the home improvement industry and our ability to grow ahead of our markets".

"In the short term, while repairs, maintenance and renovation activity on existing homes continue to support resilient demand, we are cautious on the overall market outlook for 2024 due to the lag between housing demand and home improvement demand."

Garnier added that Kingfisher would be targeting cost savings and "productivity gains" of £120m in the year ahead,

Total sales last year fell 1.8% to £13bn, with like-for-like sales down 3.1% as weaker consumer confidence and housing market prospects in France deterred consumers and led to Kingfisher to revamp operations there.

Hargreaves Lansdown analyst Susannah Streeter said the company was "still very much in repair mode, with its performance damaged by cost-of-living headwinds and a struggling housing market".

"It's issued the third warning in six months about the outlook for profits, as they fell 25% for the full year. There had been hopes that with interest rates eyed on the horizon, and UK house prices stabilising, that demand for DIY products and services would bounce back, but the company says ... recovery is further on the horizon."

Monday's statement on the current outlook follows two profit warnings in the past six months after poor sales in France and Poland. Kingfisher revised its profit forecast for the year to January 2024 down to £569m from £590m after third quarter sales fell 4%. Last September it cut the forecast from £634m.

Reporting by Frank Prenesti for Sharecast.com