Expecting to “fully offset” cost inflation in FY 25/26 through gross margin and operating cost mitigations Kingfisher has published FY24/25 results (Jan year-end) reporting PBT of £528m, slightly ahead of our forecast of £512m but broadly in line with consensus of £523m. Looking forward, the Group has given colour on how it expects each of its key geographics to perform in FY25/26. The Group expects the home improvement market in: i) The UK & Ireland to be Flat to LSD positive; ii) France to be LSD decline to Flat; and iii) Poland to be LSD decline to LSD positive. The Group does expect/hope to outperform that with market share gains. Indeed, management noted that for the first time in over six years it has gained “market share in all key regions”. Looking further down the P&L for FY25/26, the Group expects to “fully offset” c.£145m (operating cost inflation of c.£90m; UK employer national insurance contributions and similar taxes in France of c.£45m; impact of the new packaging fees regulations in the UK of c.£10m) of additional operating costs in FY 25/26 through gross margin and operating cost mitigations. With that in mind and taking account of a couple of one-offs (£33m benefit in prior year from business rates refunds that won’t repeat; £10m benefit this year from the sale of its Romanian business), the Group expects to deliver Adjusted PBT in FY25/26 of £480m-£540m. At the mid-point, this implies consensus downgrades of c.6%. At first glance we expect to move our forecast of £547m to £490-500m, implying a 10% downgrade. The Group does expect continued strong FCF generation in FY25/26, guiding for an outturn of £420-480m whilst it also remains confident that it can deliver FCF of £500m+ from FY26/27 onwards. Such is the confidence in the FCF generation that the Group has also today announced a new £300m SBB. FY24/25 PBT broadly in line with cons / prior guidance Regarding FY24/25 numbers themselves, the main points of note are: (i) Underlying revenue of £12.78bn represents a yoy decline of 1.5%, and a decline of 0.8% on a constant currency basis; (ii) Lfl Group sales fell 1.7% with Lfl sales in UK and Ireland at 0.2%, maintained by strong performance in B&Qs trade category and e-commerce sales. Turning to Europe, Poland lfl sales also came in flat, France experienced the largest lfl sales decline of -6.2%, and Iberia was the strongest performer growing +6.1%; (iii) Retail prices remained flat yoy but declines in big ticket sales had a negative mix impact on average selling prices. Volumes were down in the year but have been improving in the Group’s core categories; (iv) The Group delivered a robust gross profit of £4.76bn, improving gross margin by 50bps up to 37.3%; (v) Adjusted PBT of £528m was in line with management guidance for an outturn of £510-540m. Conference call at 9am Management will host an in-person results presentation for analysts / investors today at 09.00 (UK time). The webcast will also be available via the Investors section of its website.