Tyman hit by a "significant reduction in volumes"

Tyman (TYMN) reported that it had lost volumes representing £108mn of revenue in a context of continuing weak demand in the residential housing market and kept its dividend flat, leading investors to give the thumbs down to the annual results despite an adjusted pre-tax profit of £75mn coming in ahead of the market consensus.

The impact of the challenging demand environment was seen across the board at the supplier of engineered fenestration components - window and door hardware to the layperson - as revenue fell across its three divisions and statutory earnings slid by a fifth. Adjusted operating profit fell by 11 per cent to £84.4mn, with the margin down 40 basis points to 12.8 per cent. Management again highlighted customer destocking. 

North America is the key division, contributing 65 per cent of revenue in the year, and this was the only locale where the margin rose. However, this was on an 8 per cent decrease in revenue and flat profits. The company bought sliding and hung windows hardware business Lawrence for £44mn last July, which it hopes will help with market share progress. Revenue fell by 9 per cent and 6 per cent respectively in the smaller international and UK and Ireland markets.

New chief executive Rutger Helbing took the reins after the year end, and one thing that might be on his mind is M&A given the very manageable leverage position of 1.1 times at the year end. Analysts at house broker Numis expect this to fall in the coming years.  

The shares are valued at 10 times forward consensus earnings, and are up 16 per cent over the last year as investors look toward a recovery. A cut in interest rates by the Fed will help Tyman when it happens, but the macro situation remains highly uncertain. Hold. 

Last IC view: Hold, 299p, 25 Jul 2023