Galiform changed its name to Howden Joinery in September last year, marking time on several troublesome years that saw it hit by its legacy relationship with MFI and a more general slump in trading caused by the credit-crunch. And its financial performance in 2010 suggests the kitchen supplier has indeed found a new lease of life.
New depot openings and the introduction of new ranges underpinned steady sales growth and helped Howden pick up market share, but profits leapt ahead as the group introduced more efficient buying and manufacturing processes - despite an additional £12.3m of operating costs put in place to support growth. Its trade focus also meant that it had no trouble pushing through small price increase to protect margins from rising input costs, which contributed to a 3.6 percentage point improvement in gross margins, to 59.8 per cent.
Despite having to shell out £37.5m shedding legacy properties, pumping £25.4m into its pension schemes and investing £19.2m in new depots, strong operating cashflow meant cash balances rose sharply, and Howden expects to resume paying a "prudent" dividend this year.
Broker Espirito Santo expects full-year pre-tax profits of £110m and EPS of 12.3p (from £101m and 11.1p in 2010).
HOWDEN JOINERY GROUP (HWDN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 118p | MARKET VALUE: | £745m | |
| TOUCH: | 117-118p | 12-MONTH HIGH: | 128p | LOW: 53p |
| DIVIDEND YIELD: | nil | PE RATIO: | 11 | |
| NET ASSET VALUE: | 4p* | NET CASH: | £35m | |
| Year to 25 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 733 | 25.0 | 1.0 | nil |
| 2007 | 977 | 44.4 | 8.8 | 0.5 |
| 2008 | 806 | 79.1 | 9.2 | nil |
| 2009 | 770 | 68.6 | 8.3 | nil |
| 2010 | 808 | 100.9 | 11.1 | nil |
| % change | +5 | +47 | +34 | - |
*Includes intangible assets of £7.3m, or 1p a share | ||||
