31st Mar 2014 12:07
LONDON (Alliance News) - Flooring manufacturer James Halstead PLC Monday raised its interim dividend by 9.1% after reporting a modest revenue rise for the first-half of the year, but said its pretax profit fell as expected, after poor trading in December.
In a trading update on February 3, the AIM listed manufacturer and distributor of commercial floor coverings, had said that it was expecting a fall in pretax profits for the half-year ended December 31, 2013, after a bad trading performance in December, when many of its major markets underperformed against a trend of consistent positive results.
James Halstead Monday reported a 4% decline in its pretax profit of GBP20.4 million for the six month period, compared with GBP21.2 million the prior year, which the firm said was hampered by a very competitive marketplace, especially in Europe.
Revenues for the first-half increased 1.7% to GBP110.9 million, up from GBP109.0 million a year earlier. It said that its market position remains solid in its core territories - the UK, Central Europe and Australasia - although it said there is a lower level of new business tenders.
It said its gross margin in the period was 1% lower than the prior year, mainly due to product mix combined with a degree of price erosion, particularly in Germany.
The group said that current trading has improved, and signalling its confidence raised its interim dividend by 9.1% to 3.0 pence.
"The first six months of our financial year have been challenging but I am pleased to report that trading in the period January to March is showing growth of 7% to 8%," the company said in a statement.
"Offsetting this is the adverse margin effects of a strong sterling and, in addition, it is clear that in Europe there is fierce price competition as manufacturers battle for volume in an overall market that is, at best, flat," the firm added.
James Halstead said that it is increasing the exports under its own control with its own sales team, which it said will involve additional set up costs. It said the focus will initially be on India, North America and South America, all of which the firm believes offer greater volume potential.
"In terms of the bottom line it will be difficult to exceed last year's profit but I remain cautiously optimistic that we will not fall below that mark," said Chairman Geoffrey Halstead in a statement.
The group said its cash balance remains healthy, and it held net cash of GBP38.6 million at the end of the period.
Shares in James Halstead were trading 1% lower at 292.00 pence per share Monday afternoon.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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