News of a weaker UK market wiped the gloss off what was otherwise a good set of numbers from flooring distributor Headlam (HEAD). The group reported a steady climb in sales and profits, although analysts at Investec suggested EPS growth came largely from a well-timed acquisition and a lower tax rate than expected.
UK trading conditions have remained difficult at the start of the new financial year, too, with like-for-like sales in the domestic market falling nearly 6 per cent in January, and reduced orders from a large customer adding to the pain. As such, Investec has tweaked down current-year forecasts, and now expects pre-tax profits of £46.1m, giving EPS of 44.8p, compared with £43.1m and 41.5p in 2017.
Chief executive Steve Wilson admits that the group has started the year on “the back foot”, but he’s confident the UK slump isn’t indicative of a structural change in the market. Instead, building on the 50 basis point improvement in gross margins remains the top priority. Last year, keeping prices consistent, moving stock through the system and offering more exclusive product all helped to protect growth at the bottom line.
| HEADLAM (HEAD) | ||||
| ORD PRICE: | 489p | MARKET VALUE: | £415m | |
| TOUCH: | 489-490p | 12-MONTH HIGH: | 655p | LOW: 481p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 257p* | NET CASH: | £35m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 603 | 21.1 | 18.0 | 15.3 |
| 2014 | 635 | 30.3 | 28.6 | 15.3 |
| 2015 | 654 | 35.6 | 33.8 | 20.7 |
| 2016 | 694 | 38.2 | 36.8 | 22.6 |
| 2017 | 708 | 40.7 | 39.1 | 24.8 |
| % change | +2 | +7 | +6 | +10 |
| Ex-div: | 31 May | |||
| Payment: | 06 Jul | |||
| *Includes intangible assets of £44.7m, or 53p a share | ||||
