Kingfisher first-half profit edges lower in tough markets

Reuters
A customer shops at a B&Q store in south London
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A customer shops at a B&Q store in south London June 4, 2008. REUTERS/Alessia Pierdomenico

LONDON (Reuters) - Kingfisher (LSE:KGF), Europe's biggest home improvements retailer, met forecasts with a 1.6 percent fall in first-half profit as a better second quarter was not enough to fully offset the impact of cold weather in the first quarter.

The firm, which runs the B&Q and Screwfix chains in Britain as well as Castorama and Brico Depot in France, said on Wednesday consumer confidence remained weak in its major markets, so it would continue to focus on internal initiatives to drive growth, profit margins and cost savings.

Kingfisher, which trades from around 1,070 stores in nine countries in Europe and Asia, has suffered along with other retailers during the economic downturn as cash-strapped consumers held off buying "big ticket" items like kitchens and bathrooms and put off repairs to their homes.

The group, the world's No. 3 home improvements retailer behind U.S. groups Lowe's (LOW.N) and Home Depot (HD.N), has offset weak demand in many of its markets with a drive to improve profitability by buying more goods centrally, and directly, from cheaper manufacturing centres like China.

"Looking ahead, we remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick up in the UK housing market," Chief Executive Ian Cheshire said on Wednesday.

Kingfisher made an underlying pre-tax profit of 365 million pounds in the six months to August 3.

That was bang in line with analysts' average forecast, according to a company poll, but down from 371 million pounds in the same period last year.

After a weak first quarter that was blamed on unseasonably cold weather Kingfisher had a much better second quarter as weather conditions improved, spurring demand for seasonal items.

Total first-half sales rose 4.3 percent to 5.72 billion pounds, though sales at stores open over a year fell 0.8 percent.

Kingfisher, which ended the period with net cash of 259 million pounds, is paying an interim dividend of 3.12 pence, up 1 percent.

Shares in Kingfisher, up 48 percent over the last year, closed Tuesday at 413.2 pence, valuing the business at 9.8 billion pounds.

($1 = 0.6361 British pounds)

(Reporting by James Davey; editing by Paul Sandle)

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