Home improvements retailer Kingfisher beat profit forecasts and hiked its dividend and spending plans, saying cost cuts and business improvements would help it to keep winning in tough markets.
The group, which runs market leader B&Q in Britain and Castorama in France, said today it was raising its dividend for the first time in five years and almost doubling capital spending to £400 million.
Chief executive Ian Cheshire said he remained cautious about the outlook for consumer spending, joining a stream of retailers who are concerned about the outcome of the upcoming general election and that steps taken to cut government borrowing could hit demand.
But he was confident Kingfisher would cope, thanks to a continued focus on cost cutting and moves to boost profit margins, like more joint purchasing by its chains and buying more goods directly from cheap manufacturing centres like Asia.
Profit before tax and one-off items jumped 49 per cent to £547 million in the year ended January, beating analysts' average forecast of £543 million in a Thomson Reuters I/B/E/S Estimates poll.
Sales rose just 4.8 per cent to £10.5 billion, underscoring the work achieved on profit margins.
Showing its confidence in the future, the group lifted its dividend 3.3 per cent to 5.5 pence a share.
Its investment plans in the coming year include rolling out its TradePoint service for building specialists to its larger B&Q stores in Britain, and opening more stores in France, Poland, Turkey and Russia.
Shares in Kingfisher, which runs around 830 stores in eight countries, have beaten the STOXX 600 European retail index by 20 per cent over the past year.
They closed at 228.5 pence yesterday, valuing the business at about £5.4 billion.
Reuters