Comet a drag on Kesa

Anglo-French firm Kesa saw its first half results dragged down by Comet, the electrical retailer it has agreed to sell for just £2.

Kesa posted a loss on its retail business of €9.2m, but a profit of €16.5m when Comet was stripped out.

Pre-tax profits plunged from €27.2m in the first half of 2010 to a loss of €147.7m in the six months to the end of October 2011.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

This performance reflected a difficult first quarter against the strong World Cup comparatives in the prior year, together with increasingly challenging underlying market conditions, Kesa said.

However, the company maintained its dividend at 2.25c, which it said was possible because of the disposal of Comet.

The firm warned that market conditions were getting more difficult.

"We are well prepared for peak season and in the face of the ongoing tough market conditions are adjusting our cost to serve," said chief executive Thierry Falque-Pierrotin.

In the first half Comet's total revenue fell to €683m, a fall of 18.6% on a like-for-like basis.

In November Kesa announced it would sell Comet to a private equity group for just £2. The deal is expected to be completed in February.

Kesa said the sale was a better option than continuing with its own turnaround plan for Comet.

It will put £50m into the new holding company, and will retain liability for the Comet employees' final salary pension scheme.

Kesa said it would benefit from any subsequent onward sale of the chain, but only if the resale price was greater than £70m.