Kingfisher Reports 20% Drop in Full-Year Profits and Guides for Further Declines

After no-moat Kingfisher emerged as a beneficiary of the coronavirus pandemic, it has still managed to deliver solid full-year 2022 results against very tough comparatives and a challenging economic environment. Organic revenue fell 2.1% during the year; however, its 15.6% top-line growth since January 2019 paints a more accurate picture of the tailwinds the group experienced from the home improvement trend during lockdowns and a low-interest rate environment. These previous tailwinds have begun to unravel, leading to pretax profit declining 20% to GBP 758 million, marginally above our estimates, with management guiding for its fiscal 2024 profit before tax to fall even further to approximately GPB 633 million. While we plan to revise our forecasts for somewhat weaker-than-anticipated guidance, we don’t expect to make a material change to our GBX 330 fair value estimate. Shares appear slightly discounted.