Business

DIY boom sees profits soar at B&Q and Screwfix owner

B&Q owner Kingfisher has taken a profits hit following efforts to overhaul the business

B&Q and Screwfix owner Kingfisher has upped its full-year sales and earnings outlook after first-half profits jumped amid a pandemic-driven DIY boom.

The group posted a 70.6 per cent rise in statutory pre-tax profits to £677 million as like-for-like sales in B&Q leapt 28.8 per cent higher in the six months to July 31.

On an underlying basis, profits rose 61.6 per cent to £669 million.

Kingfisher said it was facing mounting pressures on its supply chain, with costs and availability being affected, but stressed it was managing the issues.

It announced a £300 million share buyback and hiked its interim dividend on the back of a strong set of half-year figures.

The group has been boosted by a boom in DIY amid the pandemic, although sales have slipped in recent months as it comes up against tough comparisons from a year earlier.

B&Q sales soared 81.9 per cent in the first quarter but fell 1.2 per cent in the following three months and are 4.2 per cent lower so far in the third quarter.

On a two-year basis, third quarter sales to date at B&Q are running 18.7 per cent higher and 16.1 per cent up across the group.

It said the performance is better than expected and upped its group-wide annual sales outlook, now forecasting a fall of between 3 per cent and 7 per cent, having previously pencilled in a drop of up to 15 per cent.

The group said it is now set for underlying pre-tax profits of between around £910 million and £950 million, up from a market consensus of £913 million.

But it is facing supply chain headwinds, with costs rising for freight and raw materials and revealed it is still "below target product availability levels" in some categories - in particular timber and cement.

Kingfisher said it had been able to manage through the issues and UK lorry driver shortage, with stock levels gradually improving over the first half thanks to an early buying strategy, and expects to rebuild product inventory ahead of the peak trading periods.

Kingfisher said: "Like many other businesses and industries, we are facing significant operational pressures arising due to the pandemic, including product supply and availability, shipping and logistics, and cost price inflation, which have been managed effectively to date."

It gave assurances that Christmas tree stocks are not set to be affected by the issues, with the group "well set up" for the festive season.

Thierry Garnier, chief executive of Kingfisher said: "Our industry is benefitting from new trends that we believe will be supportive over the long term.

"These include people spending more time working from home, the emergence of a new generation of DIY'ers, the need for greener homes, and a strong housing market."

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