Tuesday, September 14, 1999 Published at 07:23 GMT 08:23 UK
Business: The Company File
Kingfisher profits jump
Kingfisher is now the third biggest electrical retailer in Europe
Retail group Kingfisher reported an increase in first half profit of nearly 40% to £254m, with the growth driven by acquisitions in Europe.
The group's recent buying spree has made it the biggest home improvement retailer in Europe and the third biggest electrical retailer.
Some 40% of sales now come from outside the UK and the firm has stores in 14 countries. Group sales increased to £4.8bn from £3bn.
US giant Wal-Mart scuppered Kingfisher's plan to buy the third largest UK supermarket Asda. Wal-Mart had bid £6.7bn for the group, compared with Kingfisher's £5.7bn offer.
Chief executive Geoffrey Mulcahy said Kingfisher's international strategy was unchanged despite the loss of Asda.
While he admitted the Asda deal had been an opportunity, he said the "price went above that which we felt would be justified in terms of value to shareholders so we let it go."
The group took an exceptional charge of £4.3m, attributed largely to the failed Asda merger.
The merger with Castorama, France's top home improvement chain, produced £15m in buying synergies, Mr Mulcahy said, adding that there were scope for a further £30m over the next two years.
"Generally, we are very pleased with the way things are going with the integration. I think there's a lot of upside potential in Castorama," Mr Mulcahy said.
Further European expansion is expected, with analysts tipping the company's next move to be in Scandinavia. Scandinavian electrical retailer, Elkjop, is thought to be top of the shopping list, and likely to command a price of £350m. Mr Mulcahy declined to comment on rumours of further acquisitions.
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