Financial Trading Blog
Stock of the day 30/03/2015 – Kingfisher PLC
Kingfisher, whose largest UK presence is the orange and black of B&Q, had a dismal end to last year with losses sparked by a string of weak earnings releases. It opened 2014 at £3.86 and ended at £3.41 as sliding profits ate away nearly half a pound of the stock’s value. Its 2015 started on the same note, quickly falling to £3.10 in the mid-January market slump; however, hopes of progress in a potential takeover of French retailer Mr Bricolage sparked interest in the stock, pushing it to £3.75 by the middle of March.
(Source: IT-Finance.com 30/03/2015)
Yet frustratingly for Kingfisher, this deal evaporated today as it announced the collapse of the £201 million deal for the French firm. Mr Bricolage’s board were unhappy with the proposed deal, leading them to refuse to extend the ‘binding agreement’ they had with Kingfisher, formed last July, for the latter to acquire shareholdings in the company. This is a big blow to Kingfisher’s overseas intentions, with the company already having to sell 70% of its Chinese business for £140 million back in December as it struggled to gain much traction.
Tuesday, then, will be a big test for new boss Veronique Laury, especially after the takeover collapse. Laury will be expected to expand on the reasons for this Bricolage breakdown, as well as outlining plans for a turnaround in the company’s fortunes. On top of this, Kevin O’Bryne, the now former chief executive of B&Q in the UK and Ireland announced he was leaving the company last week, continuing a period of significant upheaval for Kingfisher.
Things don’t look like they will get much better on Tuesday, with analysts expecting a 10% fall in pre-tax profit to £670 million complimented by a 1.3% drop in revenue to £10.96 billion. Yet investors seem pleased by the Mr Bricolage collapse, pushing the stock to £3.69, whilst the stock has received a consensus rating of ‘hold’ and an average price target of £3.28, leaving hope for Tuesday’s announcement.
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