UK's Headlam warns of revenue drop as Middle East war pushes costs higher (updated)

Headlam

25/03/2026 07:41

Adds background from 2 to 5,  shares in 6, profit forecast and cost cuts from 7 to 9

Headlam's pretax loss widens to 39.5 million pounds in 2025

Middle East conflict raises costs for polypropylene and fuelm, says Headlam

Focus on profitability by 2027, cost-saving initiatives on track

March 25 (Reuters) - British wholesale flooring distributor Headlam HEAD.L said the Middle Eastern conflict had added pressure across the industry by pushing up the price of materials and warned on Wednesday its revenue would fall over the next two years.

The wider housing sector has braced for rising building costs after the U.S.-Israeli war on Iran drove up energy prices, raised the risk of inflation and squeezed margins.

Headlam, based in Birmingham, central England, sells carpets, vinyl, wood and laminate flooring to homebuilders, retailers and architects across the UK and Continental Europe.

Apart from increased fuel and freight costs, it is exposed to higher prices for the petrochemical polypropylene, which is used to make synthetic carpets.

PRETAX LOSS WIDENED, SHARE PRICE FALLS

On Wednesday it said its pretax loss widened to 39.5 million pounds ($52.88 million) in 2025 and revenue fell by 5%, pushing its shares down by 2% to 43.9 pence at 0945 GMT.

It reiterated a prediction it made in November that it did not expect to return to profitability until 2027 once it has exited low-margin business and shifted its focus to core independent retailers and contractors.

“The market will recover and, when it does, we will be well-placed to support our customers - initially smaller, but stronger, more focused and more profitable,” interim executive chair Stephen Bird said in a statement.

The company said its cost‑saving initiatives were on track and it expected overall net operating margins to return to the mid‑single digits once its turnaround strategy is completed.

As the Iran war adds to pressures on householders, Britons have cut major purchases, which for the building sector means customers focus on small decorating and refurbishment projects rather than extensive home improvements.

($1 = 0.7469 pounds)

(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru;  Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Barbara Lewis)

((RaechelThankam.Job@thomsonreuters.com;))