Shares in Howden Joinery (HWDN) jumped on release of full-year results which showed the kitchen specialist's cautious and disciplined approach still delivered impressive growth in a challenging environment. However, the initial surge was shortlived, presumably as the market priced in the scale of the external challenges.
Profits were helped along by a reduction in pension finance costs, while the gross margin stayed flat despite adverse currency effects that fed through into increased buying costs. If the pound remains at existing levels, the company estimates this would increase the cost of goods sold by £20m over the next year. The challenging conditions don't look set to dissipate just yet, and management said softer markets have continued into 2017, though early signs from a price increase put through at the end of last year were described as "encouraging".
The increase in the pay-out prompted disappointment from some analysts given the high dividend cover of around 2.8 times, but the company announced plans to carry out a second share buyback worth £80m over the next two years.
Analysts at N+1 Singer are forecasting revenues of £1.39bn for the December year-end, leading to EPS of 28.9p, rising to £1.48bn and 31.3p in 2018.
HOWDEN JOINERY (HWDN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 418.6p | MARKET VALUE: | £2.63bn | |
| TOUCH: | 418.4-418.7p | 12-MONTH HIGH: | 516.5p | LOW: 339.7p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 63p | NET CASH: | £227m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.89 | 112 | 14.0 | 3.0 |
| 2013 | 0.96 | 135 | 15.9 | 5.5 |
| 2014 | 1.09 | 189 | 23.2 | 8.4 |
| 2015 | 1.22 | 220 | 27.3 | 9.9 |
| 2016 | 1.31 | 237 | 29.5 | 10.7 |
| % change | +7 | +8 | +8 | +8 |
Ex-div: 18 May Payment: 16 Jun | ||||
