Kingfisher looks to greener customers to spur growth

BRUSSELS Tue Sep 25, 2012 5:37am EDT

BRUSSELS (Reuters) - Kingfisher (KGF.L), Europe's biggest home improvement retailer, is saving millions by cutting energy usage and avoiding waste, and is counting on equally green and cost-conscious customers to help it beat the economic downturn, its chief executive said.

Speaking in Brussels, where EU officials are finalizing a new EU law on energy efficiency, Ian Cheshire said Kingfisher's B&Q chain in Britain had saved 34 million pounds ($55 million) over the last five years by, for example, reducing tax payments on landfill, as well as cutting fuel bills.

Kingfisher, which also runs Castorama and Brico Depot stores in France, has said it is worried about trading conditions in that market, its most profitable.

Cheshire said there was "a pause" while France assessed the impact of its change of president.

"There is quite a lot of uncertainty until we know the totality of what they (the ruling Socialists) are saying," he said in an interview late on Monday. "Potentially, some is helpful."

French President Francois Hollande has unnerved business by saying he will raise taxes, but has also shifted the emphasis towards a greener, more sustainable approach, which could present an opportunity for Kingfisher.

Kingfisher earlier this year announced its latest marketing strategy "net positive", underlining a sustainable approach, including energy saving and sustainably-sourced timber.

The EU struggled to agree an Energy Efficiency Directive in June as governments raised objections to the upfront costs of measures such as building insulation.

EU EFFICIENCY

This month, the European Parliament rubber-stamped the law and now work begins on implementing it across the bloc.

Cheshire "absolutely" welcomed it, even though the EU directive has been criticized for being a messy compromise.

"The EU legislation is very important because it gets things moving," he said. "It's such a triple win," he added, referring to the potential for savings from lower energy costs, lower carbon emissions and for generating cash and jobs.

Government grants can mean free energy-saving insulation for consumers, but he said homeowners often carried out related improvements at the same time, generating sales for Kingfisher.

Sustainability and efficiency are generally as much about hard-headed survival as ideals.

"We have this massive impact on timber. We use a forest the size of Switzerland every year, so you'd better have a business model that allows you to do that," Cheshire said.

B&Q already only sells certified, sustainable timber, Cheshire said, and the plan is to replicate that across the group, which in Europe extends into Poland and Spain.

Less than 10 percent of world supply is sustainable, meaning Kingfisher has to help with reforestation if it wants to ensure its continuing supplies.

While nature is "economically invisible", there was a shift towards markets valuing sustainability, Cheshire said. Increasingly, it was a competitive disadvantage to ignore it.

"There are serious initiatives around banking and insurance companies trying to break away from a one-dimensional view (of profitability)," he said. "People are going to push for more data."

($1 = 0.6174 British pounds)

(Editing by Mark Potter)

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