Record Wet Weather Hits Profits at Kingfisher

LONDON -- This morning Kingfisher (LSE: KGF  ) released its preliminary results for the full year, reporting adjusted pre-tax profit of 715 million pounds, down 11.4% from fiscal-year 2012's figure of 882 million pounds. At 10.57 billion pounds, total sales decreased 2.4% from 10.83 billion pounds the previous year. Adjusted earnings per share fell as a result, down 11.2% to 22.3 pence in contrast to 25.1 pence in FY 2012.

Management at Europe's leading home-improvement retailer pointed to three primary causes that affected the results: Record U.K. wet weather affected footfall and seasonal sales, down 9% at a loss of about 25 million pounds in profit; weaker consumer confidence in its three key territories; and adverse foreign-exchange movements to the tune of 39 million pounds when translating euro and zloty overseas profits into sterling.

The owner of the B&Q and Screwfix brands kept the final dividend flat at 6.37 pence as a consequence, but the 25.1% hike in the interim meant that its full-year dividend was up 7% to 9.46 pence.

Kingfisher did see a positive year in terms of cash-flow generation, though: After finishing FY 2012 with financial net debt of 88 million pounds, it ended this year up with net cash of 38 million pounds.

Group chief executive Ian Cheshire commented:

While we have been unable to fully offset these headwinds, the hard work of our teams and our firm focus on our established program of self-help initiatives means we ended the year in good shape with net cash on the balance sheet, higher market share and having generated economic return for our shareholders. During the course of the year, we have developed our wider management team, mostly through internal promotions, and we have made excellent progress with the first year of our self-help plan, "Creating the Leader," a plan supporting both the short term while building the business for the longer term. Looking ahead, although we expect market conditions to remain challenging, we will continue to actively manage the business, optimising the generation and use of cash and driving longer term success through our own actions.

These words on the near-term future seem to have reassured the market, which has lifted the shares improve 1.4% to 287 pence this morning. Kingfisher now yields 3.3%, with a forecast yield of 3.6%.

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