Kingfisher, the owner of DIY group B&Q, beat forecasts with an 8.9 per cent increase in first-quarter pre-tax profit despite wet weather and the earliest Easter since 1913. But Europe's biggest home improvements retailer cut its predictions of sales growth and said that it expected a challenging year.

The group, which also owns Screwfix and Trade Depot in the UK, reported profit before tax, one-off items, goodwill, interest and share of joint ventures of £96 million in the 13 weeks to May 3, ahead of expectations.

Outdoor seasonal product sales were sharply down across Europe, which constrasted with the boost that the retailer got from last year's warm spring, but other sales were on target.

Ian Cheshire, chief executive, said that he had been already been planning for a "pretty poor year" of trading in the UK but that he had become even more cautious in recent months. "In the UK we see a market decline," he said. "Our profit underlines the importance of having a strong international business - over half our profits come from outside the UK."

He said that Kingfisher would suffer less than other retailers from higher energy costs because it did not have chiller cabinets and other high-usage fittings. It will take a few months for the increased cost of raw materials to filter through in product pricing, he said. Like-for-like cost inflation this year will rise from 2 per cent to 3 per cent on the rising cost of energy.

At B&Q, the wet weather meant that sales were weak in the first quarter despite revamped stores and new products but margins were improved, in part because of fewer mark-downs. The chain's new chief executive, Euan Sutherland, will take over in the next two weeks. He is charged with speeding up Kingfisher's growth in trade sales.

About 30 per cent of the group's capital investment of £400 million will be allocated to B&Q in this financial year, with two new large stores and one medium-sized store planned.

Mr Cheshire said that a project team had started to develop a working capital reduction plan across the group but denied that this would lead to large-scale layoffs. "We're looking at keeping costs very tight but there isn't any major redundancy plan," he said.

Mr Cheshire was promoted in January from chief executive of B&Q to run the group, which had suffered from a four-year downward trend in DIY expenditure, after predecessor Gerry Murphy failed to arrest Kingfisher's decline.

The new chief executive immediately cut the dividend and said that he would allow capital expenditure only with a clear prospect of return. He brought in Mr Sutherland, the 39-year-old managing director of Superdrug, to run B&Q.

Kingfisher has set out seven steps to increase shareholder value, including expanding its French business, increasing its presence in Eastern Europe and turning around B&Q in China.

Shares in the group were up 0.5 per cent to 139.6p in early trading.

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