Flooring firm has Brexit contingency plans in place

Flooring firm James Halstead saw a small rise in profits over the last six months.

The Manchester firm published its interim results covering the six months to December and said that revenues remained unchanged at £126m.

However operating profit at the AIM listed firm increased by 2.6% to £24.5m.

And pre-tax profit was up by 3.3% to £24.5m.

Chief Executive Mark Halstead, said: “We have supplied flooring to installations as diverse as the Spence Copper Mines in the Atacama Desert in Chile to the Hard Rock Café in Guyana and with profits growth, increased cash and new ranges developing well – a satisfying first half, cemented with a record interim dividend.”

Chairman Anthony Wild added: “Once again it is pleasing to report a record profit at the interim stage.

“We are also announcing, once again, a record interim dividend. In terms of sales, every month showed an increase on the comparative with the only exception being December.

“Export markets were in the majority of cases strong but with central Europe showing a decline of some 1.7%, largely in line with figures published by our competitors.

“The start to the second half has shown a return of solid growth.

“Whilst overall turnover was flat in comparison to the prior year, our gross margin improved as the result of an advantageous product mix and favourable plant performance, though impacted to a degree by raw material price increases.

“Our global reach continues and whether it is the Kenitra Agadir Hospital in Morocco, Tallinn Airport in Estonia or Scania buses in Poland, our products travel far.

“Closer to home our Voyager maritime flooring has been installed onboard Cunard’s MS Queen Elizabeth, in the duty free area of Knock Airport in County Mayo and, underlining our environmental and sustainability credentials, Polyflor will feature in the “Active Office” – the UK’s first energy positive building based at Swansea University.

“At the time of publishing these results Brexit is still in the news and while there continues to be much speculation on the eventual outcome we have undertaken our own review and are confident that opportunities continue to present themselves and that our business model is “fit for purpose”.

“We regularly export to far more countries than are members of the European Union and are confident of our credentials as leading flooring manufacturers.

“That said, there are many complications beyond the practicalities of port of entry delays – for example duty rates (both cross EU borders and external) and certification of standards.

“Our management has spent extensive time considering the possible implications and we have made appropriate stock adjustments as a contingency.”

“Manchester-based flooring specialist James Halstead is again providing an example of how savers can use the stock market to manage risk and get rich slowly,” said Russ Mould, AJ Bell Investment Director.

“James Halstead offers product innovation that underpins the firm’s strong competitive position, which in turn helps it produce operating margins of 20%.

“That strong return on sales drives cash flow, buffers a net-cash balance sheet and ultimately enables the firm to offer yet another increase in its interim dividend, this time by 4% to 4.0p.

“That leaves the £940 million cap company on track to add to its streak of consecutive annual dividend increases that stretches back to the late 1970s.”