Kingfisher, Europe's largest home-improvement retailer, suffered a big hit to annual profits today, with profits from its B&Q chain halved as it struggles with weak consumer demand.
Group pre-tax pre-exceptional profit slumped 33 per cent to £445.7 million pounds (€642 million) in the year to January 28th from £661.4million (€953.4 million) a year earlier. Analysts had forecast profit of £420-£462 million.
The dividend was maintained at 10.65p a share.
"The UK home improvement market continues to weaken into 2006," group chief executive Gerry Murphy said.
"It is too early to forecast the full year, although a continuation of the recent stronger mortgage and housing trends could provide some support later in the year."
Sales of high-priced projects such as kitchens, bathrooms and bedrooms have been the worst hit though Kingfisher reckons its market share grew to 14.8 from 14.7 per cent during the year.
Shares in the company, the worst performers in the FTSE 100 index in 2005, closed at 243p yesterday, down 19 per cent in the last 12 months and valuing the firm at £5.72 billion .
Kingfisher said 2005 was the weakest DIY market in Britain for more than 10 years.
B&Q's retail profit sank 52 per cent to £208.5 million, impacted by lower sales, stock clearance, aggressive price discounting and higher costs.
The retailer has cut head office staff along with prices on top-selling products to stem the decline. It has reduced stock levels by £90 million and is introducing new ranges. So far in the restructuring process B&Q has closed 17 stores and there are plans to downsize 17 more. More stores are being converted into the mini Warehouse format.
Meanwhile, a review of the group's property increased its estimated value to £3 billion. Elsewhere, Kingfisher, which owns Castorama and Brico Depot in France, said it was outperforming in that market, which has seen its slowest growth for over 12 years. Retail profit in France grew 8.8 per cent to 230 million pounds.
The group said it wants to strengthen its leadership position in Britain and France while expanding rapidly in places across Europe and Asia, where it opened 47 new stores during the year. It plans to double store numbers in those markets over the next five years.