* H1 underlying pretax profit 365 mln stg, down 1.6 pct
* H1 sales up 4.3 pct, down 0.8 pct like-for-like
* Ends half with net cash of 259 mln stg
* To launch Screwfix in Germany
* Shares down over 2 pct
By James Davey
LONDON, Sept 11 Kingfisher, Europe's
biggest home improvements retailer, reported a slight dip in
profit on Wednesday and said it was too early to call an
economic recovery in Britain, though it was encouraged by recent
data pointing to an upturn.
UK retailers are still taking a cautious view of the market
for the year ahead even though official data and surveys have
shown an improving outlook for UK consumer spending, which
generates about two-thirds of gross domestic product.
British Finance Minister George Osborne said on Monday the
UK economy had turned a corner and that its accelerating economy
vindicated the government's austerity programme.
"While we're really welcoming the change in atmosphere and
certainly the UK lending environment has fundamentally changed,
I'm not sure we're there yet in calling a sustained economic
recovery," Kingfisher's Chief Executive Ian Cheshire told
reporters on Wednesday.
"The critical indicator for us is not so much the forward
indicators (such as mortgage approval data) ... it's really what
goes through the tills," he said, noting an expectation of a six
to nine month lag in any improvement to the housing market
feeding through to do-it-yourself expenditure.
He was speaking after the firm, which runs the B&Q and
Screwfix chains in Britain as well as Castorama and Brico Depot
in France, met forecasts with a 1.6 percent fall in first-half
profit as a better second quarter was not enough to fully offset
the impact of record cold weather in the first
Cheshire said the outlook for the French market,
Kingfisher's biggest profit earner, was more uncertain than the
UK, with its housing market and consumer confidence
Shares in Kingfisher, which have risen 48 percent over the
last 12 months and hit a year high on Monday, closed down 2.7
percent at 408.5 pence.
That fall reflected the firm's cautious outlook and no
return of cash to shareholders.
Having released an exceptional provision of 145 million
pounds relating to the resolution of a French tax case,
Kingfisher ended the half with net cash of 259 million pounds.
"As it stands at the moment we're not calling any capital
surplus," said Cheshire, explaining there was still uncertainty
over trading and a lack of clarity on future leases as the firm
attempts to reduce B&Q's space.
Kingfisher, which trades from around 1,070 stores in nine
countries in Europe and Asia, is the world's third-biggest home
improvements retailer behind U.S. groups Lowe's and Home
Depot. It has offset weak demand in many of its markets
with a drive to improve profitability by buying more goods
centrally, and directly, from places like China.
Cheshire said the firm would continue to focus on internal
initiatives to drive growth, profit margins and cost savings.
"Investments in stores, a focus on value and the continued
development of ranges and services put it in a strong position
to take advantage of the upturn, when it eventually
materialises," said analysts at Conlumino.
Kingfisher also plans to launch the Screwfix chain in
Germany, with a four-store trial starting in summer 2014. The
trial puts it in direct competition with Hornbach Holding
, of which it owns 25 percent plus two shares of the
Hornbach late on Wednesday said Kingfisher's representatives
would step down from the supervisory boards of Hornbach Holding
and its Hornbach Baumarkt unit with immediate effect.
The German DIY market is already well-penetrated and saw the
insolvency of the Praktiker DIY store chain this
summer, but Kingfisher said there was space for Screwfix,
particularly as it serves trade customers.
Cheshire also said Kingfisher was interested in buying up
some of the stores that are being closed by Praktiker.
Kingfisher made an underlying pretax profit of 365 million
pounds in the six months to Aug. 3 - in line with the average of
analysts' forecasts according to a company poll, but down from
371 million pounds in the same period last year.
Total first-half sales rose 4.3 percent to 5.72 billion
pounds, though like-for-like sales fell 0.8 percent.
The company raised the interim dividend by 1 percent to 3.12