James Latham (LTHM) has reported typically unembroidered half-year results which demonstrate that - despite what the market may have feared in the wake of the referendum - this is one importer that can handle the fallout from the Brexit vote. The timber distributor's shares fell sharply in early July but have since rallied and are up another 5 per cent following this strong set of numbers.
The top line grew as the company passed on the higher prices of imported goods, aided by improvements in volumes and sales mix. Chairman Peter Latham, an eighth-generation Latham who has been with the company for more than 40 years, painted a rosy picture: trading margins ahead, lower than expected bad debts and "well controlled" overheads. As a result, gross margins were up 80 basis points to 18.7 per cent.
But broker Northland Capital Partners hints at caution for the second half of the year when seasonal changes tend to mute margins. To that end, adjusted pre-tax profit and EPS of £11.6m and 47.1p, forecast for the year ending March 2017, are below those achieved in the prior year (£12.9m and 53.5p). But revenue is expected to rise so, if margins can be maintained, the group could outperform.
JAMES LATHAM (LTHM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 685p | MARKET VALUE: | £134m | |
| TOUCH: | 675-695p | 12-MONTH HIGH / LOW: | 730p | 543p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 329p | NET CASH: | £15.1m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 96 | 6.3 | 25.8 | 4.0 |
| 2016 | 100 | 7.7 | 31.2 | 4.5 |
| % change | +4 | +22 | +22 | +13 |
Ex-div: 5 Jan Payment: 27 Jan | ||||
