Companies that upgrade their guidance twice in quick succession can often struggle to come up with new positive surprises on results day. Floorcoverings specialist Headlam (HEAD), which many feared would be hit by the Brexit vote, responded to this conundrum by announcing a special dividend and an encouraging continuation of strong trading.
In 2016, the group delivered like-for-like revenue growth of 4.7 per cent in the UK, against the 3.8 per cent registered by the rest of the market. Chief executive Steve Wilson credited this success to Headlam's unique service proposition - orders placed by 16:30pm are delivered the following day - and its ability to offer a wider range of products than competitors in an era when consumers are diversifying away from traditional carpets.
Strong demand also enabled the group to offset the impact of a depreciating pound by increasing prices. Together with the opening of seven new service centres, this helped to trigger a 12 per cent rise in underlying operating profit to £41m. Future investment plans include moving into a larger, more efficient distribution centre in Ipswich and merging its IT platforms.
Broker Investec expects adjusted pre-tax profit of £42.5m in 2017, leading to adjusted EPS of 40.7p, compared with £40.1m and 38.5p in 2016.
HEADLAM (HEAD) | ||||
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ORD PRICE: | 608p | MARKET VALUE: | £514m | |
TOUCH: | 605-608p | 12-MONTH HIGH: | 613p | LOW: 408p |
DIVIDEND YIELD: | 3.7% | PE RATIO: | 17 | |
NET ASSET VALUE: | 240p | NET CASH: | £53m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 586 | 27.9 | 25.3 | 14.90 |
2013 | 603 | 21.1 | 18.0 | 15.30 |
2014 | 635 | 30.3 | 28.6 | 15.30 |
2015 | 654 | 35.6 | 33.8 | 20.70 |
2016* | 694 | 38.2 | 36.8 | 22.55 |
% change | +6 | +7 | +9 | +9 |
Ex-div: 30 Mar Payment: 24 Apr *Does not include 2016 special dividend worth 8p a share |