Profits warning as Heywood sheds jobs
BUILDING products group Heywood Williams today issued a profits warning, claiming the credit crunch had reduced levels of new builds and home improvements.
The Huddersfield-based group said sales were down 8% in the first six months of this year compared to the same period in 2007, forcing the firm to shed 135 jobs.
Heywood said the approach regarding staff had had “a material impact” on trading over the interim period to June 30.
The group’s shares opened more than 40% down, at 8p, following today’s warning.
Around 80% of the group’s sales are derived from selling branded building products to customers in the residential home improvement and residential new build markets across Europe and North America.
The remainder of the group’s sales are split between door and window hardware to the UK commercial property market and building products to the recreational vehicle market in North America.
In a trading statement, chief executive Robert Barr said: “Trading conditions are very tough. All of the housing markets the group serves have declined sharply during 2008 compared with 2007. The normal seasonal increase in demand has not occurred in any of the markets in which the group operates.
“This is solely due to the unprecedented impact of the credit crunch on the availability and cost of mortgages for consumers in both North America and across Europe.
“In these markets, new build activity is typically down 20% to 50% and home improvement activity is down 15% to 25% year on year. To date, the commercial property market in the UK has held up reasonably well, but production of recreational vehicles in North America has slowed considerably.”
Mr Barr said that it was “extremely difficult” to forecast performance for the remainder of the year because of the ongoing uncertainty in the residential property market.
However, the company expects market conditions to deteriorate further leading to performance falling below market expectations, he added.
Heywood is focussing on maximising cash generation by optimising working capital, especially stock levels, and pursuing initiatives to increase market share.
