Kingfisher says don't expect quick French recovery

By James Davey LONDON (Reuters) - Kingfisher , Europe's biggest home improvement retailer, cautioned investors on Tuesday against expecting a quick recovery in France, the market that contributes more than half its profits. Kingfisher posted an 11.8 percent drop in third-quarter earnings, saying the weak French market, where the firm trades as Castorama and Brico Depot, was more than offsetting a stronger performance at its B&Q and Screwfix chains in Britain. "In this quarter, you saw a degree of the reality of some of the tax increases for the French consumer," Chief Executive Ian Cheshire told Reuters. "I'm not sure it's necessarily getting worse but we're expecting this sort of flat to negative picture to continue,” he said, adding that Kingfisher would keep a tight control on costs. Shares in Kingfisher, the world's No. 3 DIY player behind U.S. groups Lowe’s and Home Depot , fell 3.4 percent, having already fallen 20 percent this year. In its 2014 budget, the French government hit consumers with higher income and sales taxes to try and bring down the deficit, which remains above the European Union cap of 3 percent. Kingfisher made a retail profit of 225 million pounds in the 13 weeks to Nov. 1, below an analysts' average forecast of 227 million pounds and down from 271 million in the same period last year. The fall in profit was exacerbated by a stronger sterling, which contributed to an adverse foreign exchange hit of 13 million pounds. Total sales fell 3.6 percent to 2.82 billion pounds. Sales at UK and Ireland stores open more than a year rose 2.6 percent on a constant currency basis, but fell 4.0 percent in France. Analysts at BESI Research said they expected profit forecasts for the 2014-15 year to fall by about 3 percent to 670-680 million pounds. The results are the last to be presented by Cheshire, who is being succeeded by Veronique Laury, the head of Kingfisher's French arm, on Dec. 8. "If you take the overall picture over the seven years I'm very happy with what we and the team have achieved here," he said, noting a more than doubling in profits. Cheshire, who has been linked with the chairman job at troubled British grocer Tesco , said he was keen for another job after taking a break. "You never say never," he said, though he added his preference would be a full-time CEO position somewhere. (Editing by Kate Holton and David Clarke)