B&Q owner Kingfisher has cautioned customers are continuing to shun “big ticket” home improvement purchases, but cheered a brighter outlook thanks to signs of a pick-up in the housing market.

The group, which also owns the Screwfix chain, saw shares jump 7% higher in morning trading on Tuesday as its half-year results came in better than expected and the group revealed improved recent trading.

Kingfisher reported a 0.5% fall in underlying pre-tax profits to £334 million for the six months to July 31, although the result was flattered by a rebate of around £25 million for business rates at the B&Q business.

UK and Ireland like-for-like sales – including the Screwfix chain – fell 0.2% as cooler spring and early summer weather knocked demand, but Kingfisher said seasonal sales of items such as outdoor furniture, BBQs and decking had improved since July.

The firm revealed B&Q sales of so-called big ticket items – largely kitchen and bathroom ranges – tumbled 11.6% in the UK and Ireland over the first half.

Kingfisher also saw sales plunge 7.2% across France over the first half, with Kingfisher partly blaming ongoing political uncertainty.

But it said current trading was seeing like-for-like sales declines in the third quarter pare back to 0.3%, which marks an improvement on the 2.4% fall seen in the first half and the 3.8% drop in the three months to July 31.

The group upgraded the bottom end of its profit guidance, narrowing its full-year forecast to between around £510 million to £550 million, against the £490 million to £550 million previously predicted.

“Trading in the UK & Ireland and France is ahead of the sales trend in the second quarter, with the benefit of softer comparatives in the same period last year,” according to the firm.

Thierry Garnier, chief executive of Kingfisher, said: “As expected, demand for ‘big-ticket’ categories has remained weak, in line with the broader market, while seasonal category sales trends have improved since early July.

“Against this backdrop we maintained a strong focus on effectively managing our costs and inventory.”

But he added the group was seeing “positive early signs of a housing market recovery, notably in the UK”, which it hopes will help pave the way for improved demand for large purchases.

The group also revealed plans to roll out its smaller format Screwfix City stores across the UK, with nine now open and aims to boost this to 20 by the year-end.

It is initially focusing on London, but is looking to expand to other big cities such as Edinburgh, Bristol and Dublin, with hopes to have up to 100 Screwfix City outlets in the next few years as part of a wider focus on small stores.