Shares in Kingfisher were up on the FTSE 100 in morning trading after the group reported a rise in retail profits, despite a slight drop in sales in the third quarter ended 30 October 2010.
Total group sales were reported as falling 0.1 per cent to just under £2.7 billion. In Britain and Ireland sales dropped 3.8 per cent to a billion pounds, however in France the group saw sales rise 0.8 per cent to £1.1 billion while the group's Other International business reported a rise of 6.3 per cent in sales to £517 million.
Retail profit rose 5.9 per cent to £240 million. In Britain and Ireland profit dropped 0.5 per cent to £46 million, while in France profit increased 3.1 per cent to £130 million and in Other International profit rose 17.9 per cent to £64 million.
Net cash at the end of the period was reported as being £203 million, up from £19 million at the end of the previous quarter.
Ian Cheshire, Chief Executive of Kingfisher, said, "This quarter is significant for our overall annual profitability and I am pleased that our well established programme of self-help initiatives continued to deliver another solid performance. In particular, our businesses outside the UK performed strongly, accounting for 80% of the quarter's profit.
"In France, our innovative 'Do-it-Smart' marketing programme, which aims to make home improvement jobs quicker and easier for people, is helping to drive growth in sales and profit. In Poland, we delivered solid profit growth in a market which is starting to stabilise after a difficult first half. In China, our recovery plan remains on track with losses falling in line with our plan. In the UK & Ireland, where we were trading against tough comparatives, we were able to maintain our profit for the quarter despite on-going tough trading conditions and continued investment in developing both our consumer and trade offers. Right across the Group our sourcing initiatives and scale are increasingly being brought to bear to improve our customer offer and enhance our profitability.
"We enter our fourth quarter in good shape and with our Delivering Value plans remaining on track. We are well prepared to trade effectively in these challenging times and we continue to lay solid foundations for sales and profit growth in the future."
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "The update is broadly positive, helped along most notably by the group's overseas contribution.
"Kingfisher's continued drive to improve gross margins continues to bear fruit, whilst the performances from the French and Polish units in particular meant that 80% of Q3 profits came from outside the UK. Meanwhile, trading in China moved nearer to recovery and the business decision to source directly from cheaper manufacturing bases also helped to maintain a solid foundation for future growth. Management clearly recognise the challenges ahead, not least of which is due to the divergent nature of the pace of global economic recovery.
"The share price has had a robust last three months, having outperformed the wider FTSE100 by some 7%. Over the last year, however, the picture is darker, with Kingfisher drifting 1% as opposed to an index gain of 6%. Balancing the progress the company has made against the continuing headwinds it will face, the general market view is that the shares are a cautious buy."
By 09:30 shares in Kingfisher were up 0.76 per cent to 239.60 pence per share.