Reported Group retail profit of £390m impacted by £12m adverse foreign exchange movements when translating overseas profits into sterling
Group retail profit ahead 3.3% in constant currencies, after development costs of £11m in our new markets - Portugal, Germany & Romania. Underlying retail profit, excluding these development costs, was up 6.0%
Total sales in France grew 0.4% and profit was flat. The ongoing slow economy and declining housing market impacted our performance, particularly for our more construction orientated Brico Dépôt business
UK & Ireland sales were up 6.6% (+4.4% LFL) and retail profit was up 17.7%, benefiting from initiatives to re-energise B&Q and better demand for trade products as housing construction and activity improved. The B&Q strategy update is on pages 8-9
In Other International markets sales grew 8.8% but profit growth in Poland, Turkey and Spain was offset by new country development costs and higher losses in China
Progress continued with our 'Creating the Leader' programme including entering a binding agreement to acquire the shares of the principal shareholders of Mr Bricolage, the French home improvement retailer, and opening today our first 4 Screwfix outlets in Germany with next day national delivery
The previously announced multi-year capital returns programme to shareholders, starting with £200m in FY 2014/15 commenced in H1. £100m was returned as a special dividend and £35m via a share buyback (8.5m shares)
Remainder of the capital returns programme will resume as a share buyback
At Q2 we indicated that we experienced a sharp market downturn in June and July in France and Poland (Castorama France -3.3% LFL; Brico Dépôt -7.2% LFL; Castorama Poland -4.7% LFL). Since then in August, one of our largest months, sales were better across both markets (Castorama France -0.6% LFL; Brico Dépôt France -4.3% LFL; Castorama Poland +3.3% LFL) and overall Group LFL was +0.3%
Kingfisher's Group Chief Executive, Sir Ian Cheshire, said:
"This was a difficult first half with demand in our largest and most significant market, France, remaining particularly weak with a sharp market downturn experienced in our second quarter. We did though deliver flat profits in France, a resilient performance despite the difficult backdrop. However, conditions in the UK were more favourable with better weather and encouraging signs in the smaller tradesman market. We were able to capitalise on the better conditions with Screwfix performing particularly well growing sales by 23%. B&Q UK & Ireland also delivered their best H1 sales growth in over a decade as the new team start to gain traction with its re-energising initiatives and started to make progress with its plan to better position the business for the future.
"Looking to the longer term, we continue to work on our 'Creating the Leader' programme including opening Screwfix and Brico Dépôt stores in two new countries and accelerating the rebranding of the recently acquired Romanian business into the Brico Dépôt format. We remain convinced that investment today to develop the highly profitable Screwfix and Brico Dépôt formats into new markets creates a huge growth opportunity for Kingfisher.
"Whilst our French business saw an improvement in August we remain cautious about the economic backdrop and focused on trading effectively with continued self-help initiatives whilst continuing with our initiatives to build a long term, sustainable future for the business. We have a strong balance sheet and cashflow to enable the necessary investment in the future as well as paying a healthy dividend to our shareholders. I am pleased that we are also recommencing our share buyback."