Howden Joinery (HWDN) attributed its slide into a pre-tax loss to the coronavirus pandemic, as the manufacturer and supplier of kitchen fittings temporarily closed all of its UK and French depots in March. UK government furlough income of £21.5m is included in the group’s £14.2m pre-tax loss, while Howdens’ gross profit margin edged down 150 basis points to 59.4 per cent, reflecting mix changes and the burden of fixed costs during a period of lower production levels. The net cash position also benefited from government support to the tune of £76m.
The group has slowed down its expansion plans, lowering the number of depots it plans to open in the UK and France this year from 30 to around 20, although it has retained its target of refurbishing around 30 older depots. It also anticipates additional operating costs of £20m, which include increased pension charges, more depreciation and the development of a new distribution facility. At £60m, its capital expenditure will stay at around last year’s level, however.
Peel Hunt forecasts full-year 2020 adjusted pre-tax profits and earnings per share of £101m and 13.7p respectively, rising to £176m and 24.2p in 2021.
| HOWDEN JOINERY (HWDN) | ||||
| ORD PRICE: | 540p | MARKET VALUE: | £ 3.22bn | |
| TOUCH: | 539-540p | 12-MONTH HIGH: | 737p | LOW: 394p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 24 | |
| NET ASSET VALUE: | 98p | NET CASH: | £253m | |
| Half-year to 13 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 653 | 78.1 | 10.3 | 3.9 |
| 2020 | 465 | -14.2 | -1.8 | 0.0 |
| % change | -29 | -118 | -117 | -100 |
| Ex-div: | na | |||
| Payment: | na |
