Shares in Kingfisher were up on the FTSE 100 in morning trading after the group reported a strong rise in pre-tax profit in the full year 2010.
Group sales fell 0.5 per cent during the period to £10.5 billion, despite this pre-tax profit increased 22.5 per cent to £670 million. Analysts had predicted pre-tax profit to be lower at around £666 million.
The group, which owns B&Q, said it would be raising its final dividend 43.9 per cent to 5.145 pence per share and hiking its full year dividend 28.5 per cent to 7.07 pence per share.
During the year the company eliminated its net debt, which stood at £250 million at the end of 2009, and by the end of 2010 had net cash of £14 million.
In Britain and Ireland the group's B&Q stores saw retail profits rise 11.8 per cent to £243 million, while in France its Castorama stores reported retail profit growth of 12 per cent to £348 million.
The group's outlets in the rest of the world saw retail profits jump 34.3 per cent to £171 million.
Ian Cheshire, Chief Executive of Kingfisher, said, "We have delivered another year of strong profit growth and cash generation in what continue to be challenging times for our customers around the world.
"Our 'Delivering Value' programme of self-help has been a great success so far with profits almost doubled since it started, return on capital up sharply and financial net debt eliminated. Despite significant economic headwinds over the last few years we are now a stronger, more valuable business. I am also delighted that we are now better able to accelerate our expansion where economic returns have been proven whilst also significantly increasing our dividend for our shareholders, many of whom are now our own colleagues.
"Looking ahead, although I see no let up in the challenging environment in the short-term, I am excited by our future prospects. This year we will be stepping up the pace once more with a full set of activities in the final year of the first phase of 'Delivering Value' as well as mobilising the second phase, which is due to start in 2012. I believe we have an exciting growth opportunity, sustainable over the longer term, by creating a business that is the world's expert at making home improvement easier for customers. We are uniquely placed to use our scale, our network of international experience and our diversity for the benefit of our customers and shareholders."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "Kingfisher is trumpeting its move to the next growth phrase via a bigger than expected increase to the dividend payment. High end pre-tax profits have been delivered, with ongoing management initiatives including limited promotional activity, increased buying efficiencies, expansion into Eastern Europe and continued cost cutting all playing their part.
"As for the next growth programme, a series of measures have been outlined, including increased product innovation, expanding store outlets in both existing and new markets, a push to increase online sales and plans to incentivise management.
"In all, despite a challenging backdrop, Kingfisher continues to enhance its position as a core retailing investment. Geographical diversification, a strong balance sheet and clear plans for growth provide key attractions, all today embellished by a growing dividend payment. As such, an already favourable market consensus opinion (buy) may enjoy further upward pressure."
By 10:40 shares in Kingfisher were up 5.99 per cent on the FTSE 100 to 258.40 pence per share.