One of Europe’s biggest home improvement retailers, B&Q-owner Kingfisher (KGF) reported a 15% fall in half year profits after a poor performance in France. Pre-tax profits fell 30.1% to £281m for the six months to the 31 July.
The group said the business in France, Castorama ‘remains weak’, which is a blow to investors whom might have hoped for more encouraging noises. That’s because the firm is undergoing a major reorganisation but this is being made more difficult by tough trading conditions.
Kingfisher is blaming rising stock levels, which forced it to create added warehousing space, mainly in France, for the tough half year but investors are not in forgiving mood.
The shares slump more than 7% in early trade on Wednesday to 244.5p, heading the FTSE 100 loser board. The stock had been as high as 362p as recently as February.
But Kingfisher’s troubles do not hinder an otherwise positive opening to trading, with the main blue-chip FTSE 100 index making 20 point or so gains in early deals, trading at 7,320.85 levels.
Midcaps and smaller company indices are also on the front foot.
JACK'S OF ALL SALES
Many investors will be intrigued by today’s launch by Tesco (TSCO), Britain’s biggest supermarket, of a new discount stores chain format designed to take the battle for shoppers to German rivals Aldi and Lidl.
The first new Jack’s-branded store opens today in Cambridge.
Investors remain lukewarm on the venture, however, with concerns that Tesco will merely end up cannibalising its own shopper base.
Staying with supermarkets, Britain’s competition regulator referred Sainsbury’s (SBRY) £7.3bn takeover of Asda to an in-depth review on Wednesday because their stores overlap in hundreds of local areas.
The Competitions and Markets Authority (CMA) is to move to a further, in-depth investigation of the proposed merger between the two UK supermarket chains. If successful the joint Sainsbury/Asda will overtake Tesco as Britain’s number one supermarket with an approximate 30%-plus share of the grocery shopping market.
Sainsbury shares remain largely unaffected by the news, staying largely flat at 320.4p with the CMA decision largely anticipated by investors.
PEER-TO-PEER LOANS IPO
British peer-to-peer lender Funding Circle has confirmed plans to sell up to 71.4m new shares in its initial public offering (IPO), pitching its flotation price at between 420p and 530p.
Shares discussed its IPO plans and growth ambitions in a recent article, which you can read here.
Renewables-focused John Laing Infrastructure Fund (JLIF) said on Wednesday that its board had agreed the terms of its proposed £1.4bn takeover by a consortium of funds, with the price set at 142.5p per share in cash.
Engineering design software business AVEVA (AVV) sees its share price leap more than 7% to £30.24 after confirming steady trading and ambitions to lift operating profit margins to 30%, led by operating efficiencies and streamlined costs.
This news and more will be explained to analysts at a capital markets day on Wednesday where senior management will spell out details of its future plans following its merger with the software arm of French engineering group Schneider Electric.
Also upbeat in the engineering space is services company Babcock (BAB), which has interests in everything from ship design to nuclear decommissioning. In a trading update today the company confirms that ‘trading is in line with our expectations and our order book and pipeline remain strong’ with a combined value unchanged at around £32bn.
The firm, which operates the Faslane and Devonport naval bases, says that this represents an order book of £18bn and a £14bn pipeline, news that sends shares in the company jumping 5% to 726p.
Gold prices edged up on Wednesday as the dollar weakened despite another round of tit-for-tat tariffs in the China/US trade dispute.
Oil prices were steady as concerns that producers will not be able to respond to a shortfall in supply once sanctions on Iran are enacted outweighed a gain in stockpiles in the US, the world’s biggest oil user.
