The new chief executive of Kingfisher said yesterday that the group may close stores and reduce its workforce in China after seeing its B&Q business grind to a halt in the world's fastest-growing big economy.

Ian Cheshire, who was promoted to the top job from B&Q UK in January, said that talks had already begun with local Chinese government officials about a restructuring plan. The value of the business, the biggest player in the Chinese home improvement market, with 62 stores, is being written down by £33 million.

The move came as Mr Cheshire urged shareholders to be patient after he cut the final dividend payout by 50 per cent and gave warning that it could take four years to achieve a turnaround of the group.

Pre-tax profits fell by 3 per cent to £386million in the year to February 2 on total sales of £9.4 billion, up 8 per cent. While B&Q's like-for-like sales rose 0.6 per cent in the UK they were flat in China, where losses hit £12 million. The shares fell 4.7p, or 3 per cent, to 130.4p.

Kingfisher has suffered in China from government legislation to take the steam out of the property market. New apartment sales in the city of Shenzhen plunged by 80 per cent in three months last year.

Mr Cheshire said that Kingfisher had been guilty of failing to lend enough management support to the operation after opening 42 stores in China in the past three years.

He said: “Not many multinationals have made straight-line progress in China. We have grown incredibly fast and now just need to consolidate.

“There is still a fundamental good long-term market that is going to be there for the next 15 to 20 years.”

The chief executive's turnaround plan will centre on preserving cash and challenging each business in the group to generate better returns.

Shareholders will be the first to feel the pinch, with the final dividend yesterday cut in half to 3.4p per share. Kingfisher said the dividend at interim results later this year would also be halved. Capital expenditure across the group, which runs Castorama and Brico Depot in France, will fall 25 per cent to £400 million in 2008-09.

Mr Cheshire, who stands to pocket up to £16 million in bonuses if the turnaround succeeds, said that he wanted to adopt a more “private equity style” management model.

In a signal that he may not have agreed with the style of Gerry Murphy, the former chief executive, he said: “We are going to do a few things more ruthlessly than we have done before. We have businesses that are in strategically sound positions that aren't generating enough of a return.”

He said that the next four years would see an “escalator of improvement” as the group centralises its operations around the world under a new retail board that will seek to co-ordinate buying, product development and IT investment.

Three new geographical regions are being set up in line with the more centralised approach. A new head of the UK division, governing B&Q, Screwfix and Trade Depot, is due to be appointed in the coming days.

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