Howden Joinery makes and sells kitchen units through a network of depots, mainly to builders who then sell the kitchens on to customers. So it was little surprise to see the company adopting a cautious stance in the light of the squeeze on consumer spending.
Yet, despite all of this, same depot sales rose 3.1 per cent in the UK, and were further boosted by the addition of 20 new depots. Better still, that sales increase was achieved without compromising gross margins, which were barely changed from a year earlier at 59.5 per cent.
And, despite having to spend £17.9m terminating leases on another 17 legacy properties, increasing capital expenditure to £19.6m, and investing £7.6m on additional staff and new product roll-outs, solid cash flow pushed cash balances significantly higher than a year earlier. As a result, the group has reintroduced a dividend payment, albeit it a rather modest one that suggests that management is maintaining a cautious view for the coming year. Even so, against some strong comparable figures from last year, UK sales in the first two months of 2012 rose by 1.6 per cent.
Broker Peel Hunt expects full-year normalised pre-tax profits of £110m and EPS of 12.2p.
| HOWDEN JOINERY GROUP (HWDN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 121p | MARKET VALUE: | £770m | |
| TOUCH: | 121-122p | 12-MONTH HIGH: | 123p | LOW: 901p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 11p | NET CASH: | £57.1m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 977 | 44.4 | 8.8 | 0.5 |
| 2008 | 806 | 79.1 | 9.2 | nil |
| 2009 | 770 | 68.6 | 8.3 | nil |
| 2010 | 808 | 101.0 | 11.1 | nil |
| 2011 | 854 | 110.0 | 13.4 | 0.5 |
| % change | +6 | +9 | +21 | - |
Ex-div: 23 May Payment: 22 Jun | ||||
