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Russia and China boost Kingfisher's international performance

Kingfisher's 'Other International' business has unveiled a total sales increase of 8.3% (+2.9% LFL) to £1,140 million, driven by LFL growth in Russia and China and new store openings.

Seven net new stores opened during H1, three in Spain, two in Poland, and two in Turkey, adding around 3% new space. Including the acquisition of stores in Romania, around 15% new space was added in H1. However, economic uncertainty in Europe and record adverse weather in Germany impacted performance. Retail profits were down 11.4% to £62 million, with much of the decline due to a lower contribution from Hornbach.

Sales in Poland were up 3.1% (-0.2% LFL) to £557 million reflecting new store openings. Sales patterns were unusually volatile across H1 driven by record cold weather in Q1 followed by better weather in Q2 (Q1: -4.2% LFL; Q2 +3.0% LFL). Gross margins were down 60 basis points, with self-help initiatives more than offset by an on-going investment in pricing which annualised during Q2. Good cost control largely offset cost inflation. Retail profit declined 4.3% to £54 million.

In Russia, sales were up 12.4% to £225 million (+10.5% LFL). LFL sales were up 13.0% in Q1 though slower in Q2 (+9.0% LFL). Retail profit grew by nearly 50% to £3 million.

In Turkey, Kingfisher’s 50% JV, Koçtaş, grew sales by 5.1% (+3.5% LFL) to £172 million benefiting from new store openings, better weather and new ranges (e.g. bathrooms and lighting). Retail profit contribution was £5 million, up 17.2% year on year.

Brico Dépôt Spain grew sales by 13.5% (-6.0% LFL) to £153 million reflecting new store openings. Retail profit was £3 million, down 17.0% on last year, in a difficult market.

Hornbach, in which Kingfisher has a 21% economic interest, contributed £4 million to retail profit (2012/13: £9 million reported retail profit contribution) with sales in Germany impacted by record adverse weather in March and early April. H1 also included one month’s trading of Bricostore Romania, contributing sales of £11 million and retail profit of £nil.

B&Q China sales grew by 9.5% (+10.2% LFL) to £194 million benefiting from additional promotional activity and an improving domestic property market. Retail loss was £7 million (2012/13: £6 million reported retail loss) including £3 million of costs relating to work on the new format store trial which opened in March this year and £1 million lower sublet rental income on vacant store space.

Source : Kingfisher

11 September 2013
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