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Keep an eye on Kingfisher’s cash flow

Does DIY chain operator’s drastic cash generation decline have dividend implications?

Home improvement company Kingfisher (KGF)
saw its free cash flow evaporate to a mere £6m in the year to 31 January 2018, down from £459m a year earlier after investment in stock soaked up cash.

The B&Q-to-Screwfix brands owner’s operating cash flow (before tax and capital expenditure) plunged 45% to £557m.

Free cash flow should really fund the dividend, so Kingfisher, currently returning cash via a share buyback and a progressive shareholder reward, could be in a tricky situation going forward,
given a dividend bill of circa £230m a year.

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29 Mar 2018

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