Fitch Affirms Kingfisher Plc's Ratings.Business Editors LONDON--(BUSINESS WIRE)--Jan. 23, 2004 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. , the international rating agency, today affirmed UK-based international home improvement retailer Kingfisher plc's (Kingfisher) Senior Unsecured rating at 'BBB+' and its Short-term rating at 'F2'. The Rating Outlook remains Stable. The ratings reflect the strong position of the company's home improvement operations particularly in the French and UK markets. B&Q maintains its market-leading position in the UK and is looking to further expand its warehouse formats. Although like-for-like sales Like-for-Like Sales The portion of current sales achieved through activities that are comparable to the activities of the previous year. Notes: Using like-for-like sales is a method of valuation that attempts to exclude any effects of expansion, acquisition, or other growth in the UK has slowed in recent years, sales growth still remains healthy at c. 16% in FY03. Given B&Q's Every-Day-Low-Price (EDLP EDLP Every Day Low Prices ) strategy, it remains well positioned should consumer purchasing soften in the foreseeable future. Castorama France remains the greatest challenge for Kingfisher. After gaining control in September 2002, Kingfisher aims to revitalise the business. Such an operation is necessary given that sales growth and profitability of the French operations lag behind those of the UK. Kingfisher will look to reduce the number of suppliers and products in order to drive through purchasing economies of scale, increase own-label sales and standardise marketing in order to increase sales and improve margins. Kingfisher's other French operation, Brico-Depot continues to post strong sales growth and further margin improvement. Kingfisher's international operations, although immature, generated GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 47m of operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in FY03 on the back of further expansion. With a policy based on focussed expansion in specific countries such as Italy, Poland, China and Taiwan, Kingfisher appears well placed to continue expansion without substantially increasing its gross capital expenditure requirements. Financial year ending January 2004 will see substantial cash exceptional charges (c.GBP200m) linked to the demerger demerger n (Comm) → Abspaltung f, Demerger m of KESA Electricals, which will be offset by both the retail park disposal proceeds and proceeds from the disposal of non-core DIY DIY abbr. do-it-yourself DIY or d.i.y. Brit, Austral & NZ do-it-yourself DIY abbr DIY do it yourself a DIY shop/job. operations in Canada, Brazil and Poland. Debt was further reduced with GBP423m assumed by KESA. Fitch expects FY04 net debt of c.GBP950m compared to GBP1.9billion and GBP883m at FYE FYE For Your Entertainment FYE First Year Experience FYE Fiscal Year End FYE Funding Your Education FYE For Your Eyes (CSD-TV magazine) FYE For Your Enjoyment FYE Full Year Effect FYE First Year Enrichment FYE For Your Edification 03 and H104 respectively. Fitch expects that both adjusted leverage and adjusted interest cover at FYE04 will remain broadly stable with the long-term trend. Using Fitch's lease-adjusted ratios, the group's expected year-end leverage is within the range of 2.7x-3.0x, while adjusted interest cover for the group as measured by EBITDAR/Interest + Rent is anticipated at 3.3x-3.6x. |
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