KINGFISHER PLC- FINANCIAL ANALYSIS

Kingfisher Plc- Financial Analysis



Kingfisher Plc- Financial Analysis

Company Overview

Kingfisher plc (Kingfisher or “the company”) is a global home improvement retailer, operating through a network of retail stores. The company primarily operates in the UK, Europe and Asia. Kingfisher is headquartered in London, the UK and employs about 78,000 people. The company recorded revenues of £10,503 million ($16,595 million) during the financial year ended January 2010 (FY2010), an increase of 4.8% over 2009. The operating profit of the company was £623 million ($984.4 million) in FY2010, compared to an operating profit of £173 million ($273.3 million) in 2009. The net profit was £388 million ($613 million) in FY2010, an increase of 85.6% over 2009.

Financial Analysis

Kingfisher plc (Kingfisher or “the company”) is a global home improvement retailer, operating through a network of retail stores. The company enjoys strong market position in many of its markets and operates a flexible multi-format, multi-channel business model which allowed the company to sustain revenues and profits during tough macro conditions. However, the housing market growth is treading a slow recovery path constraining top-line growth opportunities for Kingfisher.

Strengths

Strong market position couple with multi-format, multi-channel operations provided resilience in tough environment Kingfisher is a large company and enjoys a strong market position. The company is the market leader in five of the eight countries it operates in. In its two largest markets, UK and Ireland, and France, Kingfisher is the market leader. Similarly it is the largest hardware and home improvement retailer in Poland, China and Turkey while in Spain and Russia, the company is positioned as third largest company. Kingfisher also enjoys a diversified international presence. The company over the years has expanded internationally and now derives over 60% of the revenues from outside of its core UK market. Kingfisher has entered new markets expanding the revenue generating opportunities and reducing vulnerability to a single economy. The company operates through several well-established retail banners. B&Q has a strong every day low price policy and a warehouse format, stocking an extremely wide range of products. Screwfix, on the other hand, is mainly a mail order and online retailer, but in recent years it has expanded its store portfolio by over 50.0%. Castorama has a more diversified product range, offering home wares on top of core DIY products, and therefore has a more style-led proposition. (Wrigley, 2006)

Financial Ratios

Exchange rate used is that of the Year End reported date

Profitability Ratios

01/30/2010

01/31/2009

ROA % (Net)

3.88

2.13

ROE % (Net)

8

4.41

ROI % (Operating)

8.12

2.24

EBITDA Margin %

5.81

2.14

Calculated Tax Rate %

33.52

84.62

Liquidity Ratios

01/30/2010

01/31/2009

Quick Ratio

0.48

0.49

Current Ratio

0.99

1.17

Net Current Assets % TA

(0.5)

5.21

Debt Management

01/30/2010

01/31/2009

LT Debt to Equity

0.18

0.4

Total Debt to Equity

0.31

0.48

Interest Coverage

7.84

1.37

Asset Management

01/30/2010

01/31/2009

Total Asset Turnover

1.05

1.02

Receivables Turnover

29.26

27.85

Inventory Turnover

4.02

3.56

Accounts Payable Turnover

7.69

7.39

Accrued Expenses Turnover

29.92

21.08

Property Plant & Equip Turnover

2.88

2.72

Cash & Equivalents Turnover

8.71

14.62

Per Share

01/30/2010

01/31/2009

Cash Flow per Share

0.48

0.34

Book Value per Share

2.09

2.03

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