Kingfisher, owner of the B&Q DIY chain, refused to rule out cutting its dividend yesterday after third-quarter profits in Britain fell nearly 12 per cent and dragged down strong trading across the rest of the group.

The retailer blamed “softer” consumer demand for the decline in UK trading, as well as an extensive refurbishment programme aimed at revitalising B&Q’s interiors and product ranges at a cost of £2.5 million per store. There was also the £1 million in lost profits while each site was being revamped.

The strategy was implemented by Gerry Murphy, Kingfisher’s chief executive of four years, who announced his decision to leave the group earlier this month. Kingfisher said yesterday it would take “months rather than weeks” to find a replacement. That could mean disappointment for Ian Cheshire, head of B&Q, who has been tipped as a likely successor.

UK group profits fell 11.9 per cent to £45.3 million while like-for-like sales, which strips out gains from new stores that were opened in the three months to November 3, fell by 0.5 per cent. Total UK sales rose 3.5 per cent to £1 billion. Kingfisher’s shares fell 3.2p to a ten-year low of 156.8p.

Duncan Tatton-Brown, group finance director at Kingfisher, said that the company was pleased with the progress of its refurbishment programme, but said: “Unfortunately, we are doing this in a weak market, which is widely expected to get worse.”

Even in China, where Kingfisher is expanding, growth was more subdued, with like-for-like sales up just 0.4 per cent. Mr Tatton-Brown attributed that to the Chinese Government’s clamp-down on the building of apartments.

Mr Tatton-Brown, who refused to comment on whether he will apply for the chief executive role, said he expected analysts to lower their pretax profit forecasts from £395 million to between £385 million and £390 million. International sales rose 9 per cent on like-for-like turnover that was up 4.1 per cent after double-digit rises in revenue in France and Poland. Profit rose 2.3 per cent to £126.4 million.

However, while group sales increased by 6.4 per cent to £2.4 billion, like-for-like revenue rose just 1.9 per cent and profits fell by nearly 2 per cent to £171.7 million.

Kingfisher has been dogged by speculation that it will cut its dividend. Over the past three years, Mr Murphy has kept it at 10.6p. Christian Koefoed-Nielsen, an analyst at Panmure Gordon, said that he expected a 25.4 per cent reduction next year to 7.9p to bring investor returns in line with earnings. Mr Tatton-Brown refused to comment.

Revenues from its French operations, where Kingfisher trades as Castorama and Brico Depot, rose by 5.6 per cent to £856.1 million after the group sold more of its own-branded products and sourced more of its goods directly from suppliers. In Poland, turnover increased 24.5 per cent to £194.1 million “boosted by strong consumer spending in a buoyant construction market”.

Separately, Mr Tatton-Brown also hinted it may use more of its £3.5 billion property portfolio as a source of cheaper funding.

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