REG - Headlam Group PLC - Trading Statement

HeadlamAnnouncement

28/07/2022 07:00

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RNS Number : 9885T  Headlam Group PLC  28 July 2022

28 July 2022

Headlam Group plc

('Headlam' or the 'Company')

 

Pre-Close Trading Update

 

Improved profitability despite economic backdrop

 

Headlam Group plc (LSE: HEAD), the leading floorcoverings distributor, is
providing a Pre-Close Trading Update in respect of the first six months of the
year to 30 June 2022 (the 'Period') ahead of announcing interim results on 6
September 2022.

 

Financial performance and outlook

 

The financial performance in the Period was pleasing given the economic
environment and inflationary impact on consumer spending, with underlying
profitability improved year on year. Revenue was only marginally below the
prior year period, and commissioned specialist research indicates the Company
improved its market share in the Period¹.

 

Total revenue was £323.8 million (H1 2021: £329.9 million), with a 5.1%
uplift in Continental Europe (France and The Netherlands) helping to offset a
2.9% decline in the UK related to weakness in the residential sector.
Manufacturer-led price increases helped offset operational cost inflation
during the Period. This, and the Company's continued focus on operational
efficiency and cost control, led to an improved underlying profit before tax
performance of £17.3 million (H1 2021: £16.7 million).

 

While residential sector revenue declined 5.0% in the Period, the commercial
sector increased 4.9% as it showed recovery from mainly COVID-19 related
issues in the prior two years, with the ongoing summer months being an
important trading period.

 

In-line with its Capital Allocation Priorities, the Company retains a strong
balance sheet. The Company had undrawn banking facilities totalling £74.0
million and net funds of £6.0 million as at 30 June 2022, with the reduction
from year end following normal cyclical patterns (1 January 2022: £53.7
million net funds). Alongside this, the Company has £148.1 million of
inventory and a £109.5 million nationwide freehold property portfolio(2).
Outflows in the Period included: £25.8 million of shareholder returns(3);
investment in inventory ahead of the busier trading months and new product
launches; and investments relating to the growth strategy (including network,
trade counters and equipment).

 

Currently, the Company remains on track to meet market expectations(4) for the
year, although the marketplace will undeniably continue to present weakness on
the residential side and operational cost inflation headwinds remain.

 

Chief Financial Officer appointment

 

The appointment of a permanent Chief Financial Officer is progressing well.

 

Commenting, Chris Payne, Chief Executive, said:

 

"We are pleased with our performance thus far in 2022, particularly given the
economic backdrop. Profitability has been improved, market share gains made,
and our strategy is proving to provide a countermeasure and protection against
a weaker underlying market. We believe we are set fair especially for when
headwinds ease."

 

 

¹Commissioned research produced by specialist MTW Research - Monthly UK
Floorcovering Market Analysis (January to June 2022).

 

(2)Value of the Company's current freehold property portfolio at the last
independent valuation date of January 2020, plus the book value of the
freehold Ipswich distribution centre which was built and became operational in
July 2020.

 

(3)£25.8 million of shareholder returns: £7.2 million final ordinary
dividend payment plus £14.9 million special dividend payment plus £3.7
million expenditure in the Period as part of the ongoing total £15 million
share buyback programme.

 

(4)Company-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) .

 

Net funds numbers are given excluding lease liabilities.

 

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 / David Ison / Lily Soares Smith    Email: headlam@almapr.co.uk

 

Notes for Editors:

 

Operating for 30 years, Headlam is the 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

 

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