The new chief executive of Kingfisher urged shareholders today to be patient as he cut the final dividend in half and announced plans to reduce investment by 25 per cent in an attempt to create a far “leaner and fitter” business.

Ian Cheshire, who was promoted to the top job in January from head of B&Q and could pocket a £16 million bonus in 2012, said that the group had a bright future but needed to pause for breath and work harder to generate better returns.

He said that with the economic climate likely to worsen before its gets better, the immediate aim was to improve cash margins and control costs.

Shareholders will be the first to suffer from the more prudent approach, with the final dividend announced alongside annual results today cut 50 per cent to 3.4p a share.

Kingfisher added that the interim dividend in half-year results later this year would also be halved.

In the year to February 2, pre-tax profits across the group, which also owns Castorama in France, fell by nearly 3 per cent to £386 million.

Total sales rose 8 per cent to £9.4 billion.

Operating profit in the UK fell £32 million to £131 million in the year to February 2 given the costs of a radical overhaul of the B&Q store estate.

Like-for-like sales at B&Q rose by only 0.6 per cent, the first growth for three years.

Kingfisher’s shares fell by nearly 4 per cent, or 4.9p, to 130.2p.

Mr Cheshire said: “We have to get our heads down and focus on getting returns up, then the share price will take care of itself.

“The way we are going to create shareholder value is by taking a business that generates £10 billion of sales and only £386 million of profit and make that business substantially more profitable.

“We need to do far more with what we have got.”

Capital expenditure in the coming year is being cut to £400 million, from £530 million, and new central functions will be set up to co-ordinate buying, product development and IT across Kingfisher’s stores around the world.

Three new geographic divisions have been established in line with the more centralised management approach, the UK, France and Other International.

A new head of the UK arm, covering B&Q and Screwfix, is due to be appointed.

The first business to be restructured is Kingfisher’s struggling operation in China, where sales have been hit by a sharp slowdown in the housing market.

Kingfisher has begun consultation with local governments in the country and jobs could go among the 10,000-strong workforce.

A restructuring charge of £33 million will be spread across this and next year’s results.

Mr Cheshire said: “I remain confident that Kingfisher has a bright future with a strong position in an attractive retail sector and with geographic diversification in developed and developing markets.”

Charlie Nichols, retail analyst for Landsbanki, said that the results were in line with expectations and that there was a case for a rally in the share price, which has fallen by 52 per cent, in line with the wider retail sector in the past year.

However, he added that the economic climate was likely to weigh on investor sentiment.

He said: "The cyclical risks to earnings forecasts remain very material and we think the shares are unlikely to respond to the value case until the scale and duration of the UK slowdown can be gauged."

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