Heavy losses for Heywood Williams

HEYWOOD Williams today announced heavy pre-tax losses as the Halifax-based group continues to face “very difficult” market conditions.

The firm, which distributes windows and doors throughout the UK and the US, said that losses before tax, notional interest, amortisation and exceptional items was £6.5m

During the same period last year it recorded a profit of £1.9m.

Robert Barr, Heywood Williams’ chief executive warned that the group would continue to face difficult market conditions for at least the remainder of 2009.

“The priorities for the group remain to manage its balance sheet, maximise cash generation and implement more appropriate long-term capital structure,” he said.

Work in establishing an appropriate long term capital structure for the group, which could result in a material dilution for existing holders of equity, is at an advanced stage according to the group.

Following agreement with the UK banking syndicate, the timing for implementation of a satisfactory structure has been extended to November 30 to allow for regulatory steps to be completed.

In the meantime, both of Heywood Williams’ divisions are operating within the revised covenants and have sufficient facility headroom.

Sales in the first half for the group slipped 24% compared to 2008 with residential housing markets that the company operates declining on average by 40% since the second half of 2007.

Since then Heywood Williams has reduced headcount by more than 35% with more jobs being cut at the end of last year.

It said thay its key markets were currently exhibiting signs of “fragile stability” but at reduced levels.

Heywood Williams comprises of two divisions – the hardware division, which designs, sources and distributes architectural hardware to the UK and Europe and the North American specialist distribution division, which markets and distributes branded building products under LaSalle Bristol.

Around 80% of the group’s sales of branded building products are to customers in the residential new build and home improvement market in the US and Europe.
Both division have been badly hit by the recession although Heywood Williams’s has managed to increase market share and win new business in its hardware division.

However, the manufactured housing and recreational vehicle markets in North America essentially collapsed in the fourth quarter of 2008 and very low levels of market activity were experienced in the first quarter of 2009.

In the first half of 2009 wholesale shipments of recreational vehicles declined 55% and manufactured housing production fell by 45% compared to the same period in 2008.

But there are signs of some “modest seasonal” improvement and Heywood Williams said that LaSalle Bristol continues to outperform its competitors.

“The team has been highly effective in generating cash by reducing stock levels quickly in response to reduced market demand while continuing to provide best in market customer service,” it said.