Midlands floorcoverings firm warns of 6% cost hike after Brexit

IMPORTING goods from Holland and Belgium is likely to cost one Midlands firm an extra 6% on average, it has told shareholders.

Floorcoverings supplier Headlam, based in Coleshill, said that as a consequence of sterling being devalued against the euro, it was likely to have to implement higher selling prices.

In a half-year trading update, the company said: “One effect of the prevailing sterling euro exchange rate is to increase the cost to the group of residential floorcoverings, which are imported predominantly from Belgium and the Netherlands, by on average 6.0%.

“As a consequence, selling price increases of a similar amount will be implemented by the group for these products over the course of the next month.”

It said it was too early to forecast any other effects that the referendum result might have on the group’s business but the board would continue to monitor the situation carefully and manage the situation accordingly.

While prepared ahead of the referendum vote, Headlam said trading to June 30, 2016 was in line with board expectations, with revenue for the six-month period increasing by 4.8% compared with the same period last year.
 
In the UK, like for like revenues in the period increased by 3.4% compared with H1 last year, with its residential operation seeing an increase of 4.7% along with a 0.4% increase by its commercial arm.

Combined revenues from the Continental European businesses, measured in constant currency, increased by 2.8%.  On translation to sterling, combined revenues increased by 8.9%.
 
Headlam will issue its interim results for the six months ended June 30, 2016 on August 24.