34 2GM Tuesday May 24 2022 | the times
Business
Kingfisher has shrugged off fears DIY demand is fading, with its chief executiveKingfisher: on the slide
100150200250300350400pShares have fallen 27% since the start of the year(^2019202122) Source: Refinitiv
First Covid-19
lockdown
needed had had a detrimental impact
on investment. “We need a more con-
structive dialogue. They say we don’t
need you by 2030, so why would you go
and build a project that takes six to
seven years? Your shareholders will not
allow you to do it.”
The energy transition process was
proving chaotic and disruptive, he said.
“There is no good plan... When you
don’t have plan B ready, don’t demonise
plan A,” he said. “The pressure and the
rhetoric is. ‘Don’t invest, you will have
stranded assets.’ It makes it difficult for
CEOs to make investments.”
Nasser also said Aramco could not
expand capacity any faster. He said the
company was sticking to the target of
expanding capacity to 13 million barrels
per day from the present 12 million by
2027, despite pressure to do it faster. He
warned that global oil demand would
rise after Covid restrictions in China
came to an end. “If we could do it [ex-
pand capacity] before 2027, we would
have done it,” he said. “This is what we
tell policymakers. It takes time.”
Blunders during the global energy
transition would only encourage
greater use of coal by many Asian coun-
tries, he added. “For policymakers in
those countries the priority is to put
food on the table for their people. If coal
can do it at half the price, they will do it
with coal.”
Aramco is investing in both fossil fuel
and energy transition. “That is our
difference from others,” Nasser said,
“but what we are adding is not enough
to meet the energy security of the
world.” A surge in oil prices after
Russia’s invasion helped Aramco to
report net income of $39.5 billion in the
first three months of the year, up from
$21.7 billion a year earlier.
1
The global economy is at risk
of a food crisis as a result of
unprecedented supply
disruption caused by the war in
Ukraine, the head of the
International Monetary Fund has
warned. Kristalina Georgieva, the
IMF’s managing director, told the
World Economic Forum in Davos
that anxiety around access to food
was “hitting the roof”. Page 33
2
Sebastian Siemiatkowski, the
chief executive of Klarna, the
Swedish “buy now, pay later”
company, has told its 6,500 staff
that 10 per cent of them will lose
their jobs as consumer confidence
falls and amid scrutiny of its
business model. Page 33
3
The long-awaited arrival of
the Elizabeth Line has
tempted companies to base
themselves outside of London’s
traditional office hubs, sending
office rents soaring in some lesser-
known business areas. Page 33
4
Sales at the owner of B&Q
and Screwfix have slipped ,
but Kingfisher shrugged off
concerns that demand for DIY
was waning by reasserting its
forecasts. The retailer suffered a
5.4 per cent decline in sales for its
first quarter to April 30, down by
5.8 per cent to £3.2 billion.
5
Mark Zuckerberg is being
sued by the District of
Columbia for his alleged role
in data privacy violations that led
to the Cambridge Analytica
scandal. The lawsuit claims the
Facebook founder was personally
involved in allowing the firm to
use the platform “to influence and
manipulate” the outcome of the
2016 US presidential election.
6
The European Central Bank is
likely to start raising interest
rates from negative levels in
July and to reach 0 per cent by the
end of September, Christine
Lagarde, its president, has said.
The present -0.5 per cent rate has
not changed since 2014. Page 36
7
Moonpig is paying £124 million
to buy two pioneers of the
trend for buying experiences
as gifts. The cash acquisition of
Buyagift and Red Letter Days
from Otium Capital will take
Moonpig into a growing market
valued at £6 billion a year. Page 38
8
A new nuclear power plant in
north Wales could cost as
much as £17 billion but would
be quicker and cheaper to build
than Hinkley Point C in Somerset,
an American consortium claims.
Westinghouse, the reactor maker,
and Bechtel, the engineering
group, hope to win government
support for their plan to build two
reactors on Anglesey. Page 39
9
A parliamentary committee is
to investigate whether the
water regulator Ofwat is
doing its job properly. The Lords’
industry and regulators select
committee is demanding answers
to at least 15 questions. Page 40
10
A City lawyer and his
former law firm face
claims in a High Court
case from two Jordanians for
alleged responsibility for their
abduction, detention and
interrogation in the United Arab
Emirates. The claims have been
“vehemently” denied. Page 41
Need to know
The head of Saudi Aramco, the world’s
largest oil producer, has said that the
world was already heading for an
energy crisis before Russia’s invasion of
Ukraine because companies facing
green energy pressures were afraid to
invest in the oil sector.
Amin Nasser said that the world was
running with less than 2 per cent of
spare capacity. Before Covid, the avia-
tion industry was consuming 2.5 mil-
lion barrels of oil per day more than it
was now. If the aviation industry picked
up speed, “you are going to have a major
problem”, he said at the World Econo-
mic Forum in Davos. “What happened
in Russia-Ukraine masked what would
have happened. We were going
through an energy crisis because of a
lack of investment. And it started to bite
following the pandemic.”
He said that last year’s message from
the International Energy Agency that
world oil demand was set to fall and that
no new investment in fossil fuel was
Louisa Clarence-Smith
War didn’t cause oil shock, say Saudis
B&Q owner
looks past
sales slide to
busy market
Ashley Armstrong Retail Editor
Sales at the owner of B&Q and
Screwfix have slipped in the past three
months, but Kingfisher yesterday
shrugged off concerns that demand for
DIY was waning by reasserting its fore-
casts for this year.
The home improvement retailer
suffered a 5.4 per cent decline in sales
for its first quarter to April 30, with
the total falling by 5.8 per cent to
£3.2 billion. However, Thierry Garnier,
56, the group’s chief executive, said it
was “facing very strong comparatives”
with the previous year and noted that
its like-for-like sales were still 16.2 per
cent ahead of its pre-pandemic per-
formance.
Kingfisher said it remained on track
to make adjusted pre-tax profits this
year of about £770 million. It also
announced a further £300 mil-
lion share buyback programme,
which Garnier said “reflects our
strong cash-generation and con-
fidence in the group’s outlook”.
Shares in Kingfisher closed 2.2
per cent, or 5½p, higher at
252¼p last night, having
lost 30 per cent of their
value in the past year
amid concerns that the
boom in do-it-yourself
is fading and fears that
the business will be hit
by inflationary pres-
sures and by consum-
ers tightening their
belts because of the
soaring cost of liv-
ing. Short-sellers
have been betting
that Kingfisher’s
shares will fall fur-
ther, with more than 5 per cent of its
stock on loan to hedge funds.
Despite fears that Kingfisher will be
exposed to a spending slowdown,
Garnier defended its prospects and said
that B&Q, its consumer retail chain,
was well placed in an inflationary envi-
ronment because “people want to do
more things themselves to save
money”. Garnier also said that during
the pandemic a younger generation of
people had become more involved with
DIY and gardening and more of them
were using social media such as You-
Tube for tips on how to carry out home
improvements.
The company said it was “mindful of
the heightened macroeconomic and
geopolitical uncertainty that has
emerged since the start of the year.
We are targeting further share
gains in our markets and con-
tinue to focus on our strategic
objectives and investments for
growth.”
Kate Calvert, at Investec, said
that despite the confident gui-
dance, it was difficult to see
the shares recovering
in the near fu-ture,
“particularly
given concern on
the impact infla-
tion may have on
short-term dis-
cretionary con-
sumer spending
later in the
year.
Uncertainty
also remains
over what
‘normalised’
future earn-
ings could look
like and whether Kingfisher can be-
come a sustainable growth story.”
Kingfisher, which has about 1,400
stores in total and 82,000 employees,
has been a standout success during the
pandemic. Its sales leapt as people used
lockdown savings to carry out home
improvements and to renovate their
living spaces to suit their switch to
remote working. In March it said that
annual profits had surpassed £1 billion,
making it only the third British retailer
to reach that milestone after Tesco and
Marks & Spencer.
Garnier, who took over as chief exec-
utive in 2019, has used his experience of
fast deliveries in China while leading
Carrefour’s Asian division to accelerate
Kingfisher’s online growth. He has
rolled out its click-and-collect service
by using B&Q’s own stores as depots
and introduced faster Screwfix deliver-
ies. Its Screwfix Sprint service, which
delivers goods to tradesmen within 60
A defiant post-pandemic update from
Zoom and an upgrade to the video con-
ferencing group’s forecast for annual
profits prompted a sharp rise in its share
price last night.
Eric Yuan, 52, chief executive, claimed
that growth opportunities were increas-
ing despite office-based companies call-
ing staff back to their desks after a shift
to working from home during Covid.
Such confidence was enough to per-
suade investors to snap up the shares,
which jumped by 13.4 per cent, or $11.93,
to $101.26 during out-of-hours trading.
Total revenue at Zoom rose by
12.3 per cent to $1.07 billion in the three
months to April 30. Net profits halved
to $113.6 million during the quarter, but
Zoom clears
picture with
bold update
Callum Jones
US Business Correspondent
12m
Barrels of oil produced per day by
Saudi Aramco