Solid UK performance expected to be offset by weak French and Polish results We forecast a 1.6% decline in 1H PBT to £329m (Vuma consensus £327m) with EPS up 1% to 12.8p, benefiting from the Group’s ongoing share buy-back programme. The results are expected to reflect a good UK performance, helped by favourable weather and strong seasonal product demand, which has been offset by more challenging French and Polish markets. By key markets, consensus Retail profit expectations are for UK profits of £325m (1H25 £325m), France £63m (1H25 £69m) and Poland £45m (1H25 £50m). Focus will be on: (1) robustness of UK Q2 performance given the long-awaited recovery in the UK market is now unlikely before next year. Management signaled it was planning for slower Q2 sales growth (Q1 +6.2% with LFL +5.9%) as it believed season sales had been pulled forward into Q1. Both Screwfix and B&Q have taken market share, with B&Q’s growth also benefiting from the addition of 8 converted Homebase stores in 1H and ongoing investment in Tradepoint and marketplace. (2) Update on the French restructuring and modernisation plans, as to whether there are signs that French profitability has finally bottomed; (3) Poland, to understand how temporary the impact of geopolitical factors on consumer demand will be. Upgrade to guidance seems unlikely at this point, with ongoing subdued consumer sentiment in all its markets Post its Q1 update in May, management reiterated its FY26 PBT guidance range of £480m - £540m (FY25 PBT £528m) at constant currency, which includes the elimination of a £10m loss from selling Romania. Market consensus FY26 PBT expectation is £519m (INVe £530.6m). A better economic outlook is needed to close the material medium-term valuation gap Kingfisher’s share price is down 8%/9%/flat on a 1month/3 month/YTD basis, reflecting the fading hopes of a 2H recovery and ongoing weak consumer sentiment in all key markets. The valuation (CY26E PE 9.9x), on depressed earnings, is undemanding and does not reflect the strength of its cash generation nor the fact the Group is well positioned to benefit from operational leverage when discretionary spending does recover, given market share gains and/or efficiencies in recent years (see our note Recovered Earnings Potential - published 22/10/24). A 5.1% DPS yield and share buyback offers share price support but, to close the valuation gap, we believe an improvement in the economic outlook is needed.