FY25 results in-line with consensus expectations For 12 months to end January, Kingfisher reported a 6.6% decline in adjusted PBT to £528m (Vuma cons. £523m) on total Group sales down -1.5% (1H -1.8%). At its Q3 update at the end of November (before the announced disposal of loss-making Romania), management tightened the FY25 PBT guidance range to adjusted PBT of £510m-£540m (prev £510m-£550m). A flat YoY FY DPS of 12.4p (cons 12.4p) has been declared. The Group completed £300m buy-back a week ago. FY UK sales were up 1.2% (3Q +1.2%; 1H 0.9%) with Trading EBIT up 0.6% to £558m (cons. £565m). FY France sales were down -6.1% (3Q -6.4%; 1H -9.2%) with Trading EBIT down 31.6% (-29.8%CC) to £95m (cons. £88m). It is still early days, post restructuring, in simplifying & driving productivity and testing new formats, with management targeting a 5-7% recovered EBIT margin (FY24 3.3%). Poland sales were up 3.2% (3Q +6.6%; 1H 6.9%) with LFL down -0.1% (3Q -0.4%; 1H -0.2%), helped by an improving consumer backdrop, with Trading EBIT up 10.5% to £90m (cons. £93m). Guidance for FY26 slightly weaker than market expectations. New £300m share buy-back announced as cash robust Management is guiding to FY25/26 adjusted PBT of £480m to £540m (Vuma consensus £546m incl. c.£10m Romania loss) and free cash flow of £420m to £480m (prev c.£450m). It remains confident about the medium to longer-term outlook for the sector, though short term no sign of an inflection in France with management conscious of geopolitical noise in Poland. The UK market is expected to be solid. Targeting free cash flow of >£500m per annum from FY26/27 as previously guided. Forecast under review. Looks like bottom of profit cycle will be FY26 rather than FY5 Kingfisher is well-positioned for when the consumer recovery comes through. As discussed in our note Recovered Earnings Potential, (published 22/10/24), we believe the market is materially underestimating where Kingfisher’s margins could recover to, with our scenario analysis suggesting a recovered EPS range of 38p to 43p versus FY25E EPS of 21.3p. However, France looks like it will remain a drag, with FY26 likely to be the bottom of the current cycle profit rather than FY25. The share price is up 13%/12% over the last month/YTD so we expect some profit taking this morning. The shares are trading on a CY26E PE of 9.7x on cyclically depressed profits.