Trading has been a bit grey for carpet and flooring distribution company Headlam (HEAD) - but that's no bad thing. The company posted a 15 per cent increase in operating profits for the first half, which was again marked by the 'trend' towards grey carpeting. The colour accounted for a full 40 per cent of volumes for the more upmarket sales lines launched so far this year.
The lion's share of the Birmingham-based firm's sales - 69 per cent - still comes from the residential property market, but commercial grew at a slightly faster pace on a like-for-like basis. Chief executive Tony Brewer said the company usually "jealously defended" the autonomy of its 61 operating companies, but had grouped together some premium brands under 'Headlam Corporate' to secure more commercial sales. "We are picking up orders we would not have before," he claimed, adding that the opening of a Clerkenwell-based showroom should also help.
The profit jump has allowed an increase in the dividend too. Group finance director Steve Wilson suggested more rises could follow, as the company is "coming to the end of our capex cycle". The business has invested in improving its distribution centres, but this is set to wind down once it has transferred its Ipswich premises to a new location. The move is expected to cost £13m, with construction starting in 2016.
Analysts at house broker Investec expect 2015 pre-tax profit of £33.2m, leading to EPS of 31.6p, up from £30.3m and 28.5p last year.
| HEADLAM (HEAD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 471p | MARKET VALUE: | £398m | |
| TOUCH: | 470.3-471 | 12-MONTH HIGH: | 512p | LOW: 390p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 213p | NET CASH: | £26m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 302 | 10.8 | 10.2 | 5.2 |
| 2015 | 314 | 12.3 | 11.7 | 6.0 |
| % change | +4 | +15 | +15 | +15 |
Ex-div: 3 Dec Payment: 4 Jan | ||||
