It was a decent first half for Howden Joinery (HWDN) – top-line growth was buoyed by a 12 per cent improvement at UK depots and a more modest 8.9 per cent in continental Europe. True, the gross margin declined from 64.1 per cent to 61.3 per cent, after the company gave depots more flexibility in terms of pricing. But Howden lifted prices in April, which proved sufficient to drive reported profits above the 2017 rate.
Howdens plans to open 30 new depots this year, and has made reasonable progress so far – with seven introduced already, taking the total to 668. Naturally – given that only 19 were opened last year – management expects the cost impact of these depots to be higher than in 2017.
Management also anticipates cost-push inflationary pressures to continue, while further operating costs of around £20m are likely be incurred in relation to digital upgrades, moving from the group’s old distribution centre, and extra depreciation. Howdens will keep an eye on market conditions, but for now its full-year expectations haven’t changed.
Broker Numis forecasts adjusted pre-tax profits of £247m and EPS of 32.3p for 2018 (up from £232m and 29.8p in 2017).
| HOWDEN JOINERY (HWDN) | ||||
| ORD PRICE: | 479.5p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 479.3-479.6p | 12-MONTH HIGH: | 542p | LOW: 398p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 77p | NET CASH: | £213m | |
| Half-year to 16 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 * | 553 | 65.6 | 8.4 | 3.6 |
| 2018 * | 619 | 68.8 | 8.9 | 3.7 |
| % change | +12 | +5 | +6 | +3 |
| Ex-div: | 24 Oct | |||
| Payment: | 23 Nov | |||
| *24-week periods | ||||
