UK-Wire Financial News, RNS Stock Exchange Announcements Page 1 of 16 EPIC About UK-Wire - Contact UK-Wire - Disclaimer - Help - Corporate On-Line Alerts Alerts by E-Mail - Top Announcements - Activate Price Ticker - Lin Latest FTSE100 FTSE250 techMARK AIM Company Category Sector Al Kingfisher PLC 18 September 2002 EMBARGOED UNTIL 0700 HOURS Wednesday 18 September 2002 Interim results for 26 weeks ended 3 August 2002 Kingfisher reports strong first half growth, with pre tax profits (1) ahead 26.5% to £274.7 million. • Total retail sales growth of 10.1%, with like-for-like sales up 1.3% • Retail profit ahead by 19.8% to £294.3m • Profits before tax up 26.5% to £274.7m (1) • Earnings per share ahead by 24.6% to 7.1p (2) • Dividends at 3.45p per share are up 5.2% (2) • Balance sheet strengthened by strong operating cash flow Note (1) Before exceptional items and acquisition goodwill amortisation. (2) Adjusted to reflect the bonus element of the recent rights issue and the share consolidation effected in August 2001. Kingfisher today announced first half year results, with retail sales ahead by just over 10% to £5.1 billion and retail profit up almost 20% to £294.3 million. The period saw weak consumer confidence in France and Germany, along with relatively better conditions in the UK. The Home Improvement sector performed strongly. Total sales grew 14.6%, up 2.8% on a like-for-like basis, with growth in the core categories offset by slower growth in seasonal areas in B&Q. Retail profit grew by 24.9% to £256.1 million, out-pacing sales growth, in large part due to the margin benefits arising from the ongoing cost price reduction programme in the UK. The Electrical and Furniture sector grew total sales by 1.7%, but like-for-like sales were down 1.5%. Sales performance in the second quarter was stronger than the first, with consumer demand for vision products boosted by the World Cup. Retail profit declined by 6.1% to £38.2 million. Market share gains were achieved in the UK and France, but the slower rate of sales growth, combined with a mix shift into faster growing but lower margin products, led to the profit decline. http://www.uk-wire.com/cgi-bin/articles/200209180700523169B.html 9/19/02 UK-Wire Financial News, RNS Stock Exchange Announcements Page 2 of 16 Overall the Group's profit before tax and exceptional items grew by 26.5% and, after accounting for minority interests and an increased taxation rate, adjusted earnings per share grew 24.6% to 7.1p. An interim dividend of 3.45p will be payable, up 5.2% on last year's 3.28p. Sir Geoffrey Mulcahy, Kingfisher's Chief Executive, said: 'Overall, these are a strong set of results achieved in a tough consumer environment. We are on track to deliver our strategic transformation into Europe's leading pure play Home Improvement retailer with a unified management team responsible for developing the business. In Electricals, our strong positions in France and the UK have enabled us to trade successfully in challenging market conditions, whilst in Germany we clearly have more work to do. 'In the short term we expect the slowdown in the rate of economic growth to result in a continuing difficult market environment. In Home Improvement, where we have market-leading positions in the UK and France through B&Q and Castorama, the strategic alliance with Hornbach in Germany and operations in eight other countries, we will be well-placed to compete in this exciting growth market. Meanwhile, we are committed to the separation of the Electricals business within the timetable previously announced.' -ends- Note to Editors This news release contains forward-looking statements based on current assumptions and forecasts made by Kingfisher's management. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the Group and the estimates given here. The Group accepts no obligation to continue to report or update these forward-looking statements or adjust them to future events or developments. Company profile Kingfisher is Europe's leading home improvement retailer and is ranked number three in the world. The Company operates more than 590 home improvement stores in 11 countries and enjoys market-leading positions in the UK, France, Poland and Taiwan. Sales for the Home Improvement sector for the year to 2 February 2002 were more than £5.8 billion, with retail profit in excess of £430 million. Kingfisher's Electrical & Furniture business operates more than 830 stores in nine countries. It is Europe's third largest electricals retailing business by sales and number two by retail profit. As well as holding the leading position in France and the number two position in the UK, Kingfisher also enjoys leading positions in Belgium and in the Czech and Slovak Republics. Sales for the year to 2 February 2002 were more than £3.7 billion, with retail profit of £184 million. Broker and Institutional Enquiries Ian Harding, Director of Investor Relations +44 (0) 20 7725 4889 Media Enquiries Andrew Mills, Director of Corporate Affairs +44 (0) 20 7725 5776 Media Enquiries, France Graham Fairbank, Head of Corporate Communications +33 (0) 1 43 18 52 26 Kingfisher plc +44 (0) 20 7724 7749 Kingfisher website www.kingfisher.com SUMMARY RESULTS SECTOR Retail sales (£m) % total % like-fo 2002 2001 change http://www.uk-wire.com/cgi-bin/articles/200209180700523169B.html 9/19/02 UK-Wire Financial News, RNS Stock Exchange Announcements Page 3 of 16 2002 2001 change HOME IMPROVEMENT 3,421.9 2,985.0 14.6 ELECTRICAL AND FURNITURE (2) 1,650.1 1,622.9 1.7 TOTAL 5,072.0 4,607.9 10.1 SECTOR Retail profit (£m) (1) 2002 2001 c HOME IMPROVEMENT 256.1 205.0 ELECTRICAL AND FURNITURE (2) 38.2 40.7 TOTAL 294.3 245.7 (1) Retail sectors only, excluding property, financial services, acquisition goodwill amortisation and other operating costs. (2) Electrical & Furniture includes ProMarkt for the six months to end July 2002 and the seven months to end July 2001 respectively. The prior year results for ProMarkt include sales of £52.0m and a retail loss of £5.0m relating to the additional month of January 2001. SUMMARY OTHER DATA Selling space Employees SECTOR Store nos. (000s sq. m.) (FTE) 2002 2001 2002 2001 2002 HOME IMPROVEMENT 595 557 3,980.7 3,504.4 56,883 4 ELECTRICAL AND FURNITURE 838 806 1,055.8 965.4 26,711 2 TOTAL 1,433 1,363 5,036.5 4,469.8 83,594 7 HOME IMPROVEMENT Retail sales (£m) % % like-fo 2002 2001 total change chang UK 1,940.3 1,672.0 16.0 3.0 France 1,017.9 930.6 9.4 1.4 International 463.7 382.4 21.3 5.5 Total 3,421.9 2,985.0 14.6 2.8 Retail profit (£m) % 2002 2001 change UK 173.1 140.9 22.9 France 63.6 61.3 3.8 International 19.4 2.8 n/a Total 256.1 205.0 24.9 UK The Repair, Maintenance and Improvement (RMI) market showed growth of 4.0% for the first half of the year and B&Q continued to outperform the competition and grow overall market share through its focus on new range introduction and lower prices. New rangeing activity included the new 'IT' takeaway kitchens, free standing kitchen appliances and contemporary bathroom suites. Prices continued to be rolled back, reinforcing B&Q's commitment to bring down the cost of DIY for its customers. Margin benefits have arisen from both a positive mix shift into higher margin internal decorative ranges and also the ongoing Cost Price Reduction (CPR) programme. Eight new Warehouses (including one relocation) opened in the period including h dbldk h S k iiii f h i http://www.uk-wire.com/cgi-bin/articles/200209180700523169B.html 9/19/02 UK-Wire Financial News, RNS Stock Exchange Announcements Page 4 of 16 the new double-decker Warehouse at Sutton, a key initiative for the penetration of under-represented metropolitan locations. One of the Warehouse openings was in Dublin, B&Q's first store in the fast growing Eire market. Also, two new Destination Supercentres opened during the period. Screwfix, the specialist catalogue and Internet business, grew sales and profit strongly, with customers responding well to increased on-line marketing activity. France In France the market grew by 2.5% with the combined chains of Castorama and Brico Depot growing overall market share. Castorama main chain stores in France reported total sales growth of 1.7% and like-for-like sales growth of 0.9% for the first six months. Strongest growth was delivered in the Garden category which achieved like-for-like growth of 5.0%, benefiting from new ranges and competitive pricing. Gross margins improved, but costs grew faster, with significant investment in advertising and increased pre-opening costs. The first half saw two new stores and four relocations, which built on the experience from previous Warehouse style operating formats. Brico Depot had a strong first half, outpacing market growth. Total sales grew 35.8% with like-for-like sales up 5.3%. Following a relatively flat first quarter, sales growth accelerated in the second quarter as Brico Depot reaffirmed its value proposition. Sales were adversely impacted following the introduction of the Euro, but highlighting French Franc equivalent prices restored customer confidence in the pricing structure.