An 11 per cent rise in sales was not enough to appease investors in Howden Joinery (HWDN). The market turned jittery over the investment required to maintain growth prospects at the group, which sells kitchens to small local builders, triggering a 4 per cent slide in the share price.
"We are increasing our investment in capacity in all areas of Howden's business, including in property, people, product and continuity of supply," says boss Matthew Ingle. These investments, he adds, will support the group's ability to meet demand in a revitalised construction market.
Despite rising costs, operating profits grew 6 per cent to £61m, boosted by currency movements. Howden replaced trailer units for its fleet of lorries, announced plans to open new depots in continental Europe and introduced a raft of new kitchen products. 14 new depots were also opened in the UK, which together with increasing customer accounts yielded an 11 per cent rise in domestic revenue to £476m.
Management expect to open a further 16 depots in the next six months and report that UK revenues were up 13 per cent in the first four weeks of the second half. Broker N+1 Singer expects adjusted EPS of 25.7p for 2015 (from 23.2p in 2014).
| HOWDEN JOINERY (HWDN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 520p | MARKET VALUE: | £3.4bn | |
| TOUCH: | 520-521p | 12-MONTH HIGH: | 532p | LOW: 309p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 51p | NET CASH: | £223m | |
| Half-year to 13 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 435 | 57.2 | 6.6 | 1.9 |
| 2015 | 483 | 59.2 | 7.1 | 2.8 |
| % change | +11 | +3 | +8 | +47 |
Ex-div:22 Oct Payment:20 Nov | ||||
