Shares in Howden Joinery (HWDN) were clobbered in the aftermath of the EU referendum, but the kitchens specialist sounded a cautiously upbeat note in the half-year results. Chief executive Matthew Ingle acknowledged there was "clearly a heightened degree of uncertainty" around demand and that the group "remain[s] watchful". However, no doubt buoyed by strong trading in the six months prior to the referendum, Mr Ingle added that "at this stage, we are continuing with our plans".
Those plans include implementation of a £55m share buyback programme announced in February, half of which is outstanding. Given the recent share price fall, the £52.8m spent on shares so far this year could have been better timed, although Howden generated sufficient cash in the period to launch 10 new UK depots and more than double first-half capital expenditure to £28m.
Price increases also allowed the company to push its gross profit margin up 80 basis points to 64.5 per cent, thereby offsetting negative currency movements in the period. Sterling's further decline in recent weeks means this trick is unlikely to be repeated in the second half of 2016, particularly as one-third of the business's cost of goods are denominated in euros and US dollars.
Analysts at Peel Hunt are forecasting adjusted full-year pre-tax profits of £244m, giving EPS of 30.4p, up from £220m and 27.2p in the 12 months to December 2015.
HOWDEN JOINERY (HWDN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 424p | MARKET VALUE: | £2.69bn | |
| TOUCH: | 423-424p | 12-MONTH HIGH: | 539p | LOW: 340p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 55p | NET CASH: | £183m | |
| Half-yearto 11 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 433 | 59.2 | 7.1 | 2.8 |
| 2016 | 529 | 74.8 | 9.1 | 3.3 |
| % change | +22 | +26 | +28 | +18 |
Ex-div: 20 Oct Payment: 18 Nov | ||||
