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Profit at DIY retailer Kingfisher drops 20%, expects further fall

Outbreak of the coronavirus disease (COVID-19) in Watford

By James Davey

LONDON (Reuters) - European home improvement retailer Kingfisher forecast a further fall in profit this year after it plunged 20% in 2022-23 from a pandemic-driven record high in the previous year.

Thierry Garnier, CEO of the group which owns B&Q and Screwfix in Britain and Castorama and Brico Depot in France and other markets, said expectations of lower profit in 2023-24 reflected pressures on consumer demand, higher energy and staff costs, and the hit to profit of accelerated expansion in France.

"While... February started the year pretty OK, very resilient trend, we are mindful of the uncertainty of the year ahead of us," Garnier told reporters on Tuesday.

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Kingfisher made an adjusted pretax profit of 758 million pounds ($929 million) in the year to Jan. 31 2023, at the top end of guidance of 730 million-760 million pounds but down from the 949 million pounds made in 2021-22.

Sales fell 0.7% on a constant currency basis to 13.1 billion pounds, with like-for-like sales down 2.1%.

More people discovered or rediscovered do-it-yourself (DIY) during the COVID-19 crisis as they spent more time at home, had fewer leisure options and travelled less.

In 2022 rises in interest rates, inflation and energy bills put a squeeze on consumer spending both in the UK and Europe.

DIY sales continue to be supported by the trend for more working from home and customer investment in energy saving products.

(Graphic: Kingfisher's profit woes - https://www.reuters.com/graphics/KINGFISHER-RESULTS/myvmobajmvr/chart.png)

Kingfisher, whose shares are up 16% so far in 2023, said it was comfortable with analysts' average forecast for adjusted pretax profit in 2023-24 of 633 million pounds.

February like-for-like sales rose 0.5%, with sales of "big-ticket" items such as kitchens and bathrooms broadly flat.

But Kingfisher said it expected some impact in March from adverse weather conditions and strong comparative numbers in Poland.

"We remain confident in both the growth of our industry, and in our strategic priorities supporting growth ahead of our markets," Garnier said.

Kingfisher, which maintained its total dividend at 12.40 pence a share, also announced new medium-term financial priorities, focused on growth, cash generation and higher returns to shareholders.

It intends to announce a new share buyback programme following the completion of the existing 300 million pounds programme this year.

($1 = 0.8162 pounds)

(Reporting by James Davey; editing by Sarah Young, Louise Heavens and Susan Fenton)