LONDON (Reuters) - Kesa (KESA.L), Europe's No. 3 electricals retailer, expects sales in France, Italy and Spain to fall further as consumers continue to shun big-ticket purchases with the euro zone crisis rumbling on.
Shares in Kesa, which owns the market-leading Darty business in France, fell 9.5 percent on Wednesday after it posted a 42 percent fall in full-year profit and slashed its dividend.
"In France last year, the (electricals) market declined by around 4 percent. We expect it to decline further this year, mainly due to vision (TV sales) but maybe not to a 4 percent level," chief executive Thierry Falque-Pierrotin told reporters.
Kesa, which will change its name to Darty from July 31, had enjoyed a boost in TV sales in recent years, mainly because of soccer's world cup in 2009/10 and as countries moved to digital broadcasting in its 2010/11 year.
"In Italy and Spain, the market declined double-digit (last year) and we still see it declining but maybe at a less dramatic level."
Analysts have said Kesa could dispose of its loss-making businesses in Italy, Spain and Turkey.
Falque-Pierrotin said the focus was on delivering operational improvements in the three markets, developing synergies with Darty France and monitoring market changes.
However, chairman David Newlands, set to be succeeded by senior independent director Alan Parker in September, said: "I do not think in business you can ever say never".
The CEO said a renewed focus on customer service, internet initiatives and operational efficiencies would enable Darty France to take profitable market share and grow sales in the current year despite the tough economic headwinds.
Electrical specialists, such as Kesa and Europe's top two - MediaMarkt Saturn (MEOG.DE) and Dixons Retail (DXNS.L) - are battling competition from supermarket chains and internet retailers at a time when consumers are cutting spending in the face of rising prices, weak wage growth, rising unemployment, government austerity measures.
Dixons will publish full-year results on Thursday.
PROFIT FALL, DIVIDEND CUT
Kesa made an underlying pretax profit of 59.0 million euros($75 million) in its 2011/12 year to end-April, in line with its guidance.
The group, which also has established businesses in Belgium, the Czech Republic, the Netherlands and Slovakia, said while revenue for the continuing group fell 2 percent to 4.03 billion euros, it won market share overall.
Kesa sold its loss-making British business Comet to private investment firm OpCapita for a nominal 2 pounds in February.
After taking exceptional impairment and restructuring charges of 70.5 million euros and booking a loss from discontinued operations of 274 million euros, Kesa made a total loss for the year of 314 million. In 2010/11, it made a profit of 30.7 million euros.
It ended the year with net debt of 126.5 million euros and halved its total dividend to 3.5 euro cents.
Kesa shares, a quarter of which are owned by activist investor Knight Vinke, have lost 63 percent of their value over the past year. They were down 5.25 pence at 50 pence by 0600 EDT, valuing the business at 243 million pounds.
"We do not see a swift profit recovery, indeed we see downside to consensus forecasts," Panmure Gordon analyst Philip Dorgan said.
Newlands said there was no plan to switch the group's listing to Paris from London, even after the Comet disposal and its name change to Darty. "There are many companies around the world that do not have their primary operations in the country of their listing."
(Reporting by James Davey; Editing by Dan Lalor)
(This story has been corrected in the fourth paragraph to fix the dates - 2010/11 to 2009/10, and 2011/12 to 2010/11, and make text conform.)
- Link this
- Share this
- Digg this
- Email
- Reprints
0 comments:
Post a Comment