Strong H1, but caution on H2 Kingfisher reported a strong H1, beating consensus expectations, particularly on gross margin and adj. PBT. Management expects FY Jan-26 adj. PBT at the top end of its guidance of GBP480-540m, implying an -11% decline in H2 profits. Investors believe that this guidance is conservative, but management notes that Kingfisher profits are typically H1 weighted and that it expects elevated costs from marketing and technology spend in H2. Banking the H1 beat, we model FY Jan-26 adj. PBT of GBP540m (from GBP500m). Remain Underperform and raise TP to GBp240 (from GBp235). H1 results: gross margin driven beat Kingfisher reported a 13% adj. PBT beat in H1, supported by better LFL sales growth and a +100bps increase in gross margin. UK LFL sales were above expectations while France and Poland LFLs saw a sequential improvement from Q1 to Q2. The strategic initiatives, Trade and Marketplace, both reported double-digit growth. Buying and sourcing efficiencies contributed +60bps to gross margin. FY Jan-26: cautious on the second half Kingfisher now sees FY Jan-26 adj. PBT at the top of its GBP480-540m range, implying an -11% YoY drop in H2 profit. Profits usually lean toward the first half of the year, and costs for UK National Insurance Contributions, marketing and technology are also second half weighted. We model FY Jan-26 adj. PBT of GBP540m (from GBP500m) but anticipate consensus to rise higher, since investors believe that this guidance is potentially conservative. Management remains cautious about the UK and French consumers but is slightly more optimistic on Poland. Remain Underperform, target price rises to GBp240 and USD6.5 We raise our FY Jan-26 profit estimates by c.10% to reflect the H1 profit beat. Our outer year profit estimates also rise but by a smaller amount. Our DCF-based TP rises to GBp240 (from GBp235) and we remain Underperform. At our TP, Kingfisher trades on a CY25 P/E 10.7x and CY26 10x.