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Kingfisher shareholders to benefit from 200m payout

Kingfisher, the DIY group that owns B&Q, will pay out about £200m to shareholders this year after its financial performance experienced a revival along with the UK housing market.

Europe's biggest home improvements retailer said this year's return of surplus cash would be the first of a "multiyear" programme of extra payouts to shareholders. It increased its final dividend by 6.4%, pushing the full-year payout up 4.7% to 9.9p.

Pretax profit for the year to 1 February rose 4.1% to £744m on sales up 5.2%, in line with City estimates. Kingfisher shares, up 45% in the last year, were the biggest gainers in the FTSE 100 index, up 7.2% to 435p.

Kingfisher, which also owns Screwfix in Britain, relies on a busy property market to sell decorating equipment, tools, bathroom suites and other goods linked to house building and sales. The group has seen its fortunes improve after years in the doldrums, after the financial crisis depressed the UK property market.

Kingfisher said that after a difficult first three months of the year business had started to pick up in the UK, with Screwfix performing better than B&Q. Business was weak and profit fell in France, Kingfisher's biggest market, where the economy has been close to recession.

The chief executive, Sir Ian Cheshire, said: "We finish a challenging year in good shape. Looking ahead we are well placed to benefit from a pickup in consumer spending as Europe's economies return to growth."

UK house prices and sales have surged since the chancellor launched his Help to Buy mortgage support programme last April. The Office for National Statistics reported that house prices were up 6.8% in the year to January and the British Bankers' Association said mortgage approvals had fallen slightly in January but were up 53% from a year ago.

Two more companies that depend on the housing market posted upbeat figures on Tuesday. First-half trading profit at Wolseley, the plumbing supplies company, rose 8.8% to £360m and it increased its interim dividend by 25%. And in a trading statement, Topps Tiles said underlying first-half pretax profit was set to rise to £8m from £4.7m a year earlier.

Kingfisher will open in two new markets this year with two Brico Dépôt stores in Portugal and four Screwfix outlets in Germany. It will also sell its 21% stake in Germany's DIY store group Hornbach for £195m.

The independent retail analyst Nick Bubb said the loss of Hornbach's contribution and the upfront cost of the Portuguese and German openings would cut into profits this year. "Profit forecasts are coming down from £830m to [about] £800m, versus the £744m outcome for last year. But Kingfisher sounds quite cheerful about life, particularly in the UK." Kingfisher also said it would look for a partner for its lossmaking B&Q China business, in line with its link-up in Turkey.

Sean Farrell - The Guardian

28 March 2014
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