Kingfisher says election clouds recovery hopes

Kingfisher also cut its net debt to 200 million pounds and forecast year-end net debt of 300 million pounds, much better than previous guidance.

"The progress from a net debt position of 1.6 billion pounds at January 08, to just 300 million pounds by January 10 is nothing short of miraculous," said Andrew Wade, analyst at Numis, who raised his year to end-January 2010 pretax profit forecast to 541 million pounds from 525 million.

Some analysts have suggested that Kingfisher's improved debt position will lead it to resume dividend payment increases, but Cheshire said no decision would be made until March.

"Although the net debt is well down there's still more to do, which I think means we're not in any hurry to start handing more money out," he said.

Kingfisher shares have more than doubled over the last year on recovery hopes, outperforming the DJ Stoxx European retail index <.SXRP> by 43 percent.

The stock was up 0.1 percent at 236.5 pence at 12:20 p.m., valuing the business at about 5.6 billion pounds.

Kingfisher's sales increased 5.6 percent to 2.69 billion pounds, with sales at stores open over a year up 0.8 percent.

Like-for-like sales increased 5.7 percent at B&Q, but fell 0.8 percent at Castorama. They were up 1 percent in Poland and were positive in China for the first time in two years.

(Additional reporting by Mark Potter; Editing by Dan Lalor and Jon Loades-Carter)