Flooring specialist Headlam (HEAD) had a tough time in continental Europe in 2014, as weak trading in Switzerland more than offset sales improvements in France and the Netherlands. The net result was a 30 per cent decline in European operating profits to £1.2m.
By contrast, the UK business strengthened, posting 6 per cent like-for-like sales growth, compared with 2 per cent growth in the wider market. Bolt-on acquisitions boosted the division further, so that operating profit increased 14 per cent in 2014, to £30.7m. Management said Headlam should achieve further progress this year, despite challenges in Europe, as it invests in the business and UK trading momentum continues. Current trading looks promising: like-for-like sales in January and February 2015 were running 3 per cent ahead year on year.
Management plans to splash £18m of the company's net cash this year and next on acquisitions, expanding the service network and building a new distribution facility in Ipswich. This new warehouse will also cut supply chain and inventory costs. After the year-end, Headlam acquired Matty's Wholesale Carpets, which should immediately boost earnings.
Following upgrades, Peel Hunt expects pre-tax profit of £32.2m this year and EPS of 30.4p, up from £30.3m and 28.6p in 2014.
| HEADLAM (HEAD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 454p | MARKET VALUE: | £382m | |
| TOUCH: | 453-455p | 12-MONTH HIGH: | 495p | LOW:390 |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 217p | NET CASH: | £24.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 536 | 25.0 | 21.5 | 12.4 |
| 2011 | 570 | 27.6 | 24.6 | 14.15 |
| 2012 | 586 | 27.9 | 25.3 | 14.85 |
| 2013 | 603 | 21.1 | 18.0 | 15.3 |
| 2014 | 635 | 30.3 | 28.6 | 17.5 |
| % change | +5 | +44 | +59 | +14 |
Ex-div: 4 Jun Payment: 1 Jul | ||||
