Costs hammer profits at Irish chain of DIY giant B&Q
PRE-TAX profits at the Irish arm of DIY chain B&Q tumbled more than a third to €2.5m in its last financial year, despite sales edging 1.4pc higher to €86.2m.
The chain, part of the Kingfisher group, operates eight outlets in Ireland and employs about 550 people here.
The reduction in profitability in the 12 months to the end of last January at the Irish chain came as its administrative expenses rose to €6.2m in the period, from €5.1m the year before.
Its selling and distribution expenses fell by close to €600,000, to €26.1m.
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Its wage bill declined to €10.8m from €11.1m, even as the number of staff remained broadly unchanged.
Termination payments of €167,000 were paid to directors during the last financial year, the accounts show.
B&Q's Irish arm entered examinership in 2013 during the downturn.
At the time, its parent firm set aside more than €20m to fund the restructuring of its business here.
The funds included provisions for the impairment of properties and the estimated costs of exiting leases.
Its Irish arm had been racking up millions of euro of losses at the time.
Kingfisher is Europe's second-largest home improvement retailer and also owns Screwfix.
The group trades from more than 1,300 stores in 10 countries across Europe, including the UK, France, Poland and Romania. In November last year, it said it would pull out of Russia, Spain and Portugal.
In September, Carrefour veteran Thierry Garnier succeeded Veronique Laury as Kingfisher CEO.
Kingfisher is in the fourth year of a five-year programme that was designed to boost its earnings.
However, profits reversed in its 2019 financial year, and the group said in March it would part company with Ms Laury, who had been its CEO since 2014.
A 6.4pc fall in first-half profit at Kingfisher has underlined the task that Mr Garnier faces, particularly in France, where like-for-like sales fell 4.4pc, and at B&Q, where they were down 3.2pc.
Ms Laury's strategy, costing £800m (€928m) over five years, involves unifying product ranges across brands, boosting e-commerce and seeking efficiency savings.
Kingfisher made an underlying pre-tax profit of £353m in the six months to July 31.
While ahead of analysts' average forecast of £342m, it was down from £377m in the corresponding period last year.
Some analysts believe that a decline in Kingfisher's shares in the past year has left it vulnerable to a private equity bid.
"We're not happy where the share price is, but we think through our own efforts, we can get that moving quite quickly once we start delivering better performance through execution," Kingfisher chairman Andy Cosslett said in September.
Additional reporting Reuters