Records tumble for Bury flooring firm James Halstead

Bury-based commercial flooring manufacturer and distributor, James Halstead, reported record revenues and profits today.

Sales for the year to June 30 rose by 3.6% to £249.5m and pre-tax profits of £46.7m showed a 0.2% increase.

Shareholders will see a 4.3% increase in the final dividend of 9.65p per share.

Chief executive Mark Halstead welcomed the results, saying: From the Forensic Laboratory of The Metropolitan Police in Buenos Aires to the new Schengen area of Athens Airport, we continue to cover the world and again report record turnover, profit and dividend.

“With the investment in product, processes and structures, I believe we have undertaken significant groundwork in the year to put us in good stead for continued progress.”

Chairman Anthony Wild, reporting final results for the first time in the role, said the firm’s broad geographical spread should insulate it from any ill effects caused by Brexit.

He said: “As the ‘Brexit’ deadline grows ever nearer I, and the board, remain vigilant for issues that may arise, though obviously the detail remains somewhat hazy.

“Notwithstanding this lack of clarity, I believe we are well placed in that we export to far more countries outside the EU than are members of the EU.

“In addition, we have attained full Authorised Economic Operator (AEO) status with HMRC.

“AEO status is an internationally-recognised quality mark indicating that our role in the international supply chain is secure, and that our customs controls and procedures are efficient and compliant.

“It is considered, depending on the exact details of Brexit, that this will minimise the risk of any post Brexit border delays.”

He added: “With projects as diverse as The Irish Whiskey Museum on Grafton Street in Dublin and the Universal Church, Sao Paolo, our portfolio continues to reach far across the globe.”

Mr Halstead said he believes the firm is well placed for future progress, backed by exciting new product ranges.

“We are at an advanced stage of another new range – Polyflor Wovon.

“A first of its kind for our company, Polyflor Wovon is an exciting collection of interwoven vinyl tiles, a low maintenance alternative to traditional textile materials and has a stylish, tactile design as well as a heavy commercial vinyl construction, perfect for specification within busy interior environments.

“It should broaden the possibilities for vinyl installations.”

He said: “With the investments in product, processes and structures, I believe we have undertaken significant groundwork in the year to put us in good stead for continued progress in 2019.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “When it comes to consistent increases in shareholder pay-outs few can match James Halstead.

“Today’s 4% increase in its total dividend for fiscal 2018 to 13.5p a share adds to a streak of consecutive increases that stretches back to the late 1970s.”

“Adjusting for stock splits in 2006, 2011 and 2012, James Halstead’s dividend has grown from 0.016p a share in 1977 to 13.5p for the year ending June 2018.

“The shares have struggled for traction over the past 12 months, thanks to raw material cost pressures (themselves the result of the weaker pound), an abandoned takeover of a rival firm and full-year profits which came in flat at £46.7m, a fraction below the market consensus forecast of £47.6m.

“But James Halstead has been able to push through price increases to compensate for the cost pressures, thanks to its strong market position, reputation and track record of innovation.

“Add that to £50.7m net cash pile and the AIM-quoted company could well add to its stunning long-term share price performance record.

“Since 1977 the shares have risen from 0.29p to 429p for a 149,931% capital gain, which massively outpaces the 2,620% advance in the FTSE All-Share over the same period.

“If 41 years is too long for many of us to think about (even though it is the appropriate time horizon for investing for your pension), the numbers over the last 20 years are no less stunning.

“Since 1998, James Halstead’s dividend has grown from 1.28p to 13.5p and its shares have soared from 31.4p to 429p.

“That 1,268% gain beats the 71% advance in the FTSE All-Share over the same period hands down.”

He added: “Even if the past is no guarantee for the future, and purists would argue that James Halstead’s earnings cover for the dividend in the year to June 2018 is lower than ideal at 1.31 times, this shows two things:

“1. How picking stocks with strong competitive positions, good management, a healthy balance sheet and consistently robust returns on capital can generate excellent portfolio returns for very patient investors who are prepared to take a very long-term view. The stock market can be a fine get-rich-slow mechanism when it works well and when it is used properly (and not treated like a fruit machine and source of potential near-term jackpots).

“2. The importance of dividend growth. The 13.5p-a-share dividend of 2018 compares to James Halstead’s 1998 share price of 31.4p – the chances of Halstead’s shares staying unchanged over that period on what would now be a 43% dividend yield backed by a net cash balance sheet would be pretty slim. Share prices grow into, and are pulled along by, rising dividends.”