As the housing market has taken off, so too has demand for James Latham's (LTHM) timber and panel products. For the supplier of decking, hardwood flooring, natural acrylic stone and laminates to construction markets, those positive trends sent adjusted operating profits up 12 per cent to £10.6m.
Appetite was particularly strong for the timber merchant's modified wood product, which uses the acetylation process to ensure durability and dimensional stability. That, coupled with strong demand for WoodEx - its engineered timber product for the joinery sector - lifted revenues by 7 per cent.
But weighty demand also saw costs increase. James Latham forked out 9 per cent more on selling and distribution to keep up with demand to support higher volumes, smaller order size and later order times on next day deliveries. Nevertheless, cash profit margins widened slightly to 6.9 per cent.
Looking ahead, plans have been unveiled to upgrade sites in Yate and Wigston over the next two to three years at a cost of about £14m. Management also vowed to spend more on introducing new products to differentiate its offering. House broker Northland Capital forecasts adjusted pre-tax profits of £10.8m for the year to March 2016, giving adjusted EPS of 44p (up from 39.9p in 2015).
| JAMES LATHAM (LTHM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 668p | MARKET VALUE: | £130m | |
| TOUCH: | 655-680p | 12-MONTH HIGH: | 720p | LOW: 478p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 321p | NET CASH: | £10.6m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 130 | 8.0 | 30.8 | 9.25 |
| 2012 | 144 | 7.2 | 31.9 | 9.75 |
| 2013 | 143 | 7.0 | 28.7 | 10.20 |
| 2014 | 163 | 10.5 | 44.3 | 11.40 |
| 2015 | 175 | 10.1 | 40.3 | 12.50 |
| % change | +7 | -4 | -9 | +10 |
Ex-div: 6 Aug Payment: 28 Aug | ||||
