Home improvement companies are expected to report lower profits after costs have skyrocketed

Kingfisher, which operates B&Q and Screwfix, has previously indicated that its sales and profits have softened over the past year as DIY demand from locked-down customers also began to slow.

The London-listed company is expected to report a pre-tax profit of between £730m and £760m for the year to January when it updates investors on Tuesday.

It comes after Kingfisher lowered its previous estimate of £770million in its last update in November.

During the update to shareholders, Kingfisher had highlighted a modest increase in revenue for the quarter to October and welcomed a “great start” to the most recent quarter.

However, the group is likely to continue to see a decline in full-year like-for-like sales after the start of the year failed to keep up with pandemic-triggered demand.

Analysts had forecast a 2.1% like-for-like sales decline, with a roughly flat trend in the second half of the year.

But investors are likely to keep looking ahead amid fears that persistent inflationary pressures and weakness in the housing market could further weigh on demand.

Analysts have predicted a further decline in like-for-like sales and earnings for the new fiscal year, leaving shareholders on Tuesday to welcome an improved outlook and growth strategy.

Russ Mold, Investment Director of AJ Bell said: “Shareholders and analysts will then seek an update on the Powered by Kingfisher program and the financial priorities outlined by Chief Executive Thierry Garnier as part of the plan.

“They will be aiming for faster revenue growth than the broader market, earnings growth in line with and then faster than revenue growth, and strong free cash flow.”

Meanwhile, rival Wickes has been on a more positive trajectory, which has helped shares improve by around a fifth since October.

In January, the company said that its like-for-like sales rose 5.2% in the fourth quarter of 2022 as households rushed to buy energy-saving products to help stem soaring utility bills during the winter months.

Nonetheless, the company is still under pressure from ongoing cost pressures and forecasts that its gas and electricity bill will rise by a further £10m in 2023 despite the slowdown in wholesale energy prices.

The company is expected to report a pre-tax profit of between £72m and £76m for 2022 on Thursday, up from £85m in 2021.

Investec analyst Kate Calvert said: “The focus will be on the 2023 outlook, which is expected to remain challenging.

“The market will be looking for views on the stability of the underlying markets, top-line price inflation and confirmation that cost inflation assumptions are in place.”