REG - Headlam Group PLC - AGM Trading Update

HeadlamAnnouncement

19/05/2022 07:00

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RNS Number : 0219M  Headlam Group PLC  19 May 2022

19 May 2022

Headlam Group plc

('Headlam' or the 'Company')

 

AGM Trading Update

 

Headlam Group plc (LSE: HEAD), Europe's leading floorcoverings distributor,
is providing the following trading update in respect of the first four months
of the year ahead of its Annual General Meeting ('AGM') being held at 10.00am
today.

 

Financial performance

 

Q1 2022 revenue was broadly in line with plan, followed by a slightly weaker
performance in April 2022 due to overall softening in the residential sector
and some delayed orders. In the four months, residential sector revenue for
the group was down 0.5% against the prior year period on a like-for-like
basis. However, the Company's branded, higher-end and higher-margin products
performed above plan, and delayed orders are now coming through.

 

The commercial sector continued to show recovery from its severely impacted
position in both 2020 and 2021 due in large part to COVID-19 related
restrictions. In the four months, commercial sector revenue for the group was
up 5.8% against the prior year period on a like-for-like basis.

 

The overall revenue performance in the period was in-line with 2021. Profit
performance was above 2021 due to strong margins continuing into 2022,
supported by the Company's ongoing focus on operational efficiency through
cost control.

 

Strategic progress

 

The Company's strategy is focused on driving additional revenue opportunities
from a more efficient operating base, including capturing market share in
underweight customer segments. Encouraging progress was made in the period,
including: further new customer gains and increase in SKUs in the multiple
retailer segment; 25% of sales now coming from the new and improved digital
channels (2019: 11%); and the revenue performance of the trade counter network
which is subject to improvement and significant roll-out being up 13% for
invested sites on the same period last year (on a like for like basis).
Additionally, activity was focused on preparations for new product launches
over the coming months to support market share gain.

 

Outlook

 

As expressed at the time of the March 2022 Final Results announcement, the
continuing inflationary environment is likely to impact consumer spending
during the year, thereby suppressing underlying volumes and revenues in the
industry. However, the Company's strategy, set out above, should provide a
countermeasure and some protection against the weaker underlying market.
Additionally, the continuing manufacturer-led price increases due to cost
inflation will continue to provide a support to revenue performance and help
offset operational cost inflation.

 

The summer months are an important period for the commercial sector activity
owing to refurbishment, repair and maintenance particularly in educational and
other establishments. With a severely impacted industry-wide commercial sector
performance in the previous two years, there is an expectation that some of
the work previously not undertaken will take place this year.

 

Given the above, and the performance to date, the Company continues to be
comfortable with profit expectations¹ for the year.

 

Outside of trading

 

Patrick Butcher, formerly Group CFO at Capita plc, The Go-Ahead Group plc and
Network Rail, has joined the Company as Interim Chief Financial Officer on a
temporary basis while the current independent search process for a permanent
Chief Financial Officer is ongoing. The Board currently anticipate being able
to provide an update on the search prior to or at the Company's next scheduled
Pre-Close Trading Update on 28 July 2022. The Board would also like to take
the opportunity to again express its deepest thanks to Philip Lawrence who is
stepping down as Non-Executive Chairman at today's AGM after seven years on
the Board.

 

Commenting, Chris Payne, Chief Executive, said:

 

"With our comprehensive growth focused strategy which is demonstrating
progress, we believe we are well positioned despite the expected weakening in
the residential sector of the marketplace. We look forward to the busier
trading months ahead and the ongoing delivery of our strategy."

 

Keith Edelman, Non-Executive Chairman (designate, subject to the annual
director re-election shareholder vote at today's AGM), commented:

 

"I would like to put on record the thanks of the Board for Philip's
contribution. Philip has been instrumental in developing a far stronger Board
for Headlam, and under his Chairmanship the Company has developed and is now
delivering on its strategy. We wish him well for the future."

 

Investor Presentation

 

Headlam Group plc is pleased to announce that Chris Payne, Chief
Executive, will provide a live presentation relating to the AGM Trading
Update via the Investor Meet Company platform today (19 May 2022) at 3.00pm
BST.

The presentation is open to all existing and potential shareholders. Investors
can sign up to Investor Meet Company for free and add to meet Headlam Group
plc via:

https://www.investormeetcompany.com/headlam-group-plc/register-investor
(https://protect-eu.mimecast.com/s/WsgPCAmjyu09QoiGzcyL?domain=investormeetcompany.com)

Investors who already follow Headlam Group plc on the Investor Meet Company
platform will have automatically been invited.

 

¹Company-compiled consensus market expectations for revenue and underlying
profit before tax, on a mean basis, are available on the Company's website
at www.headlam.com (http://www.headlam.com/) .

 

Enquiries:

 Headlam Group plc                                          Tel: 01675 433 000
 Chris Payne, Chief Executive                               Email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)
 Catherine Miles, Director of IR and ESG

 Panmure Gordon (UK) Limited (Corporate Broker)             Tel: 020 7886 2500
 Erik Anderson / Edward Walsh / Ailsa MacMaster

 Peel Hunt LLP (Corporate Broker)                           Tel: 020 7418 8900
 George Sellar / John Welch / Andrew Clark

 Alma PR (Financial PR)                                     Tel: 020 3405 0205
 Susie Hudson / Rebecca Sanders-Hewett / Lily Soares Smith  Email: headlam@almapr.co.uk

 

Notes for Editors:

 

Operating for 30 years, Headlam is Europe's leading floorcoverings
distributor, providing the channel between suppliers and trade customers of
floorcoverings.

 

Headlam works with suppliers across the globe manufacturing a diverse range of
floorcovering products, and provides them with a cost efficient and effective
route to market for their products into the highly fragmented trade customer
base.

 

To maximise customer reach, Headlam operates 66 businesses across the UK and
Continental Europe (France and the Netherlands). Each business operates under
its own trade brand and utilises individual sales teams while being supported
by the group's distribution network, central teams and resources.

 

The Company's extensive customer base covers both the residential and
commercial sectors, with principal customer groups being independent retailers
and smaller flooring contractors alongside other customer segments such as
larger (multiple) retailers, housebuilders, specifiers, and larger contractors
(including local government / authorities).

 

Headlam provides customers with a market leading service through:

 

·       the broadest product offering;

·       unrivalled product knowledge;

·       tailored service propositions and solutions;

·       sales team and marketing support;

·       ecommerce support and digital applications;

·       nationwide delivery; and

·       trade counter and collection service.

 

www.headlam.com (http://www.headlam.com/)

 

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