Higher profits forecast at Halstead
COMMERCIAL flooring company James Halstead is powering ahead, unscathed by the deepening recession.
In a pre-close trading statement the Manchester business said its turnover and profit have continued to grow.
It is starting to benefit from falling raw material prices and export margins are higher because of the weak pound.
But chairman Geoffrey Halstead said he was cautious about global demand and would focus on cost reduction and working capital control in the coming months.
And the business conceded that it has been hit by falling interest rates because it has such high cash reserves. It holds £31m in cash and lower rates are forecast to cost the business £1m a year.
Finance director Gordon Oliver told TheBusinessDesk this estimate was accurate as rates would not increase substantially this year. The business was achieving a return of 6.5% on its reserves last year but this has slumped to 1.5%.
James Halstead also said it had acquired a new 289,000 sq ft warehouse in Oldham to allow for continued expansion. It paid in cash but did not disclose how much it cost.
Chairman Geoffrey Halstead said: “The first six months sales and profit have been satisfactory and with the UK government committed to continuing infrastructure spending we believe there is a bedrock of demand within the home market.
“Though sterling weakness benefits our significant export business, we remain cautious as to global performance in the current climate and we will continue our focus on cost reduction and control of working capital in the coming months. “
The Radcliffe-based group, which supplies commercial flooring for everything from army kitchens to football stadiums and art galleries, has a huge geographical spread. It earns around 42% of revenue from the UK but also works in Europe, the Middle East, South America and the Caribbean.
Last year pre-tax profits rose 27% to £29.9m on turnover of £158.7m, up 15.7%. Interim figures for the six months to December 31 are expected on March 31.
