Against an uncertain market backdrop, trade-focused kitchen specialist Howden Joinery (HWDN) saw UK depot revenue rise by 4.9 per cent to £1.6bn in 2019, with 2.5 per cent growth on a same-depot basis. Previous years had seen the gross margin decline as a push to increase sales volumes came at the expense of price. But, thanks to a price hike implemented in January last year, the gross margin expanded by 0.6 percentage points to 62.3 per cent, ahead of analyst expectations. So, despite an increase in costs as the group invested in new depots and digital upgrades, operating profit rose 8 per cent to £260m.
Howden opened 39 new depots in the UK last year, taking the total to 732. All new depots were in the more efficient format that had been trialled in 2018. Planning to open a further 30 depots in 2020, it believes its UK footprint can eventually reach 850 locations.
The group also spies opportunities in the immature French market where most kitchens are purchased through DIY outlets rather than the trade. Opening five depots there last year, it hopes to introduce five more in 2020.
Numis expects adjusted pre-tax profit of £270.7m and EPS of 36.1p in 2020, rising to £284.3m and 37.9p in 2021.
| HOWDEN JOINERY (HWDN) | ||||
| ORD PRICE: | 660p | MARKET VALUE: | £3.9bn | |
| TOUCH: | 660-661p | 12-MONTH HIGH: | 737p | LOW: 477p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 19 | |
| NET ASSET VALUE: | 104p | NET CASH: | £267m | |
| Year to 28 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.22 | 220 | 27.3 | 9.9 |
| 2016 | 1.31 | 237 | 29.5 | 10.7 |
| 2017 | 1.40 | 232 | 29.9 | 11.1 |
| 2018 | 1.51 | 239 | 31.3 | 11.6 |
| 2019 | 1.58 | 261 | 35.0 | 13.0 |
| % change | +5 | +9 | +12 | +12 |
| Ex Div: | 21-May | |||
| Payment: | 19-Jun |
