* CEO says outlook for 2013 opaque, France particularly so
* Q3 retail profit 257 mln stg vs forecast 255 mln stg
* Currency translation cost 16 mln stg of retail profit
* Q3 total sales 2.71 bln stg, down 3.9 pct
* Shares down 1.5 pct
By James Davey
LONDON, Nov 29 Kingfisher, Europe's
biggest home improvements retailer, said uncertainty over the
French government's budget plans had knocked consumer confidence
in its largest market, as it posted a 6 percent drop in
The group, which runs market leader B&Q in Britain and
trades as Castorama and Brico Depot in France and elsewhere,
said on Thursday it was also difficult to see when trading
conditions might improve in the UK, making planning difficult.
"The hardest thing at the moment is trying to call the
outlook for 2013 which is just frankly opaque," Chief Executive
Ian Cheshire told reporters.
Store groups in Europe, particularly those focused on "big
ticket" items like kitchens and bathrooms, are finding the going
tough as consumers' disposable incomes are squeezed by
inflation, muted wages growth and austerity measures, and as
they fret over the implications of the euro zone debt crisis.
A continuing low level of housing transactions is also bad
news for home improvement firms like Kingfisher.
Cheshire said the backdrop in France was "very uncertain",
blaming a lack of clarity on the final budget proposals of new
Socialist president Francois Hollande.
"It's a temporary period of uncertainty rather than a major
dislocation in the economy but it could be a six month
uncertainty while people try and work out what their tax
position's going to be," he said.
Shares in Kingfisher, the world's No. 3 home improvements
retailer behind U.S. groups Lowe's and Home Depot
, were down 1.5 percent at 276 pence at 1150 GMT, valuing
the business at 6.6 billion pounds ($10.5 billion).
"With around half of profits coming from France, it is
likely that the downgrade cycle is not yet over," said Panmure
Gordon analyst Philip Dorgan, referring to possible further cuts
in analysts' profit forecasts.
In Britain, Cheshire said Christmas trade across the sector
would "bump along OK but probably come in a bit of a late rush."
He said he would welcome measures to cut unemployment and
assist the housing market in British finance minister George
Osborne's Dec. 5 autumn statement.
Kingfisher has tried to offset weak demand with a drive to
improve profitability by buying more goods centrally, and
directly, from cheaper manufacturing centres such as China.
The group, which trades from over 1,000 stores in eight
countries in Europe and Asia, made a retail profit of 257
million pounds in the 13 weeks to Oct. 27, ahead of analysts'
average forecast of 255 million, but below 273 million in 2011.
Third-quarter profit was hit by 16 million pounds on the
translation of euro and Polish zloty overseas profits into
sterling. On a constant currency basis retail profit was flat,
helped by better margins and cost savings.
Sales fell 3.9 percent to 2.71 billion pounds, with sales at
stores open over a year down 2.8 percent at constant currencies.
Like-for-like sales fell 2.8 percent in France and were down
3.8 percent in Britain and Ireland. They fell 0.8 percent in the
'other international' division, which includes Poland, Russia
In September Kingfisher posted a 15.5 percent fall in
first-half profit that reflected a hit to sales from dreadful
summer weather in Britain and France.
Cheshire said it was "slightly concerning to see people (in
the UK) forecasting the worst winter in a hundred years after
the worst spring and summer in a hundred years."
Though Kingfisher ended the period with net cash of 222
million pounds, Cheshire said a possible capital return would
not be considered until a longstanding French tax case relating
to 130 million pounds was settled.