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The week ahead: Kingfisher, Topps Tiles and Wolseley to report

Two thoroughly British enthusiasms – housing and holidays – will be in focus this week.

On the housing front, house builder Bellway, DIY retailer Kingfisher, tiles retailer Topps Tiles, plumbers’ merchant Wolseley and equipment hire firm Speedy Hire all have more than a passing interest in the UK housing market, though in the case of the latter pair the UK is not necessarily the centre of the universe.

Broker Peel Hunt says that Wolseley has tidied up its portfolio significantly in the last few years, leaving little to do on that front, raising the question of what it does for an encore.

“US trading should have continued to be healthy with the group taking further market share. The UK and continental European activities will have been more mixed,” Peel Hunt said in a preview of Wolseley’s half-year results.

“Currency will have been a bit of a drag especially for the Canadian operations. Overall, we expect to see turnover growth of c6% with only c2% growth in Q2 due to FX. Profits should have performed better due mainly to the US and UK activities,” the broker added.

As for Bellway, Peel Hunt is not expecting any bad news, given the state of the housing market and the strong interim management statement the company released last month.

“Sales prices will have kept ahead of cost pressures but this is an area to keep an eye on over the next 12 months or so along with the price of land,” suggests Peel Hunt’s Clyde Lewis.

Kingfisher last updated the market in November, when it reported underlying sales up by 1% during its third quarter. The share price retreated by 4% on the statement, but has rebounded by 6% since, notes Charles Stanley.

“Attention … will focus on outlook comments for the current year and any update on strategy; the share price level suggests that investors expect DIY markets in Europe to remain relatively subdued over the medium term,” the broker reckons,

Deutsche Bank is predicting profit before tax of £740mln and earnings per share of 22.6p.
“We expect the focus to be on three areas. First, the use of cash: we think a full share buyback announcement is unlikely before September, but think a special dividend (c5p/share) is a reasonable alternative.

“Second, B&Q's new management: at this early stage we do not expect definitive targets, but see good margin expansion in the year ahead. Third, the 'Creating the Leader' strategy: we think 2014 will be another year where sourcing gains are invested to reinforce Kingfisher's competitive positioning.”

Source : John Harrington - Proactive Investors
www.proactiveinvestors.co.uk/companies/market_reports/66919/week-ahead-wolseleys-growth-to-be-hampered-by-fx-headwinds-0000.html

23 March 2014
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