FY23 PBT 2.3% ahead of consensus and in-line with company expectations For the 52 weeks to 31st January, Kingfisher has reported a 20.2% decline in underlying PBT to £758m versus the company guidance range of £730m to £760m given in November (INVe £741m/company compiled consensus £741m). By key division, UK & Ireland retail profits fells 24% to £603m (cons £559m), with France down 11.9% to £195m (cons £210m), while Poland EBIT increased 9.4% to £148m (cons £174m). A full year DPS of 12.4p is proposed (FY22 12.4p). The £300m share buyback continues with circa two thirds completed as of 31 Jan and it has the intention to announce another one later in the year. Kingfisher announced the acquisition of Connect Distribution Services (CDS), a B2B/B2C retailer of appliance spares, accessories and consumables, from administration by Screwfix. CDS’ last filed accounts for the year to 31 October 2020 showed sales of £98.8m and EBITDA of £7.3m, so not material relative to the Group scale but potentially a nice add-on. Management is comfortable with current FY24 PBT consensus of £633m (INVe £667m) Kingfisher reports an encouraging start to 1Q24 with Group total sales up 1.9% and LFL sales +1.5%, driven by the UK. Resilient sales trends seen in ‘big-ticket’ categories (broadly flat YoY) as well as surfaces & décor (largest category by weighting) and tools & hardware. Management expects some impact in March from adverse weather conditions and strong Polish comparatives. New medium term priorities set out are for sales to grow ahead of the market, with +1.5% to +2.5% net new space contribution. Kingfisher expects PBT to grow faster than sales, and strong free cash generation of £450m to £500m in FY24 and then over £500m in FY25/26. Forecast/Recommendation/TP put under review The valuation not particularly demanding (CY24 PE of 8.9x with a DPS yield of 4.8%) and we believe the market will like the strength of cashflow and the proposed continuing buyback announced this morning. Kingfisher is in a robust financial position, given its strong balance sheet, to ride out short term economic pressures. However, in our view, the shares are unlikely to perform until investors are prepared to look through the inflationary pressures and higher interest rates ahead.