REG - James Halstead PLC - Chairman’s Statement to the Annual General Meeting

James HalsteadAnnouncement

01/12/2022 07:00

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RNS Number : 1121I  James Halstead PLC  01 December 2022

 

1 December 2022

JAMES HALSTEAD PLC

(the 'Group')

 

Chairman's Statement to the Annual General Meeting

 

James Halstead plc, the commercial flooring company, is holding its 107(th)
AGM today at 12.00 pm at which the Chairman, Mr Anthony Wild, will make the
following statement:

 

"Firstly, let me welcome you all to our AGM in a return to our traditional
face to face meeting.  Customarily, I give a short update on trading for the
first few months of our financial year but with markets and economies facing
many issues I feel a longer update is appropriate.

 

As announced at our full year results on 3 October 2022, we took the decision
to increase our levels of stockholdings as cost and supply pressures continued
to affect our global markets. This decision was taken in order to mitigate
future energy cost increases and potential raw material supply shortages. It
was also noted that, in the event the crisis did not escalate, it was likely
that we would need to suspend some production for a period.

 

Turning to the current trading, on the positive side, our confidence in the
resilience of commercial flooring continues and in most markets sales are
ahead of this stage last year. During this same period we have also seen our
stock levels reduce by over 10%. Additionally, it has been a mild autumn and
the energy crisis has not further escalated. International shipping rates have
started to reduce and availability of shipping has improved. We anticipate
that shipping rates will remain lower in the near-to-mid term. Moreover, the
fall in the value of Sterling has offered a competitive advantage in
exports.

 

The adverse effects of the energy crisis on our supply of key materials from
Europe has not hit our supply chain, as yet, but this was always a key risk
for the winter and remains so.

 

I must note, unfortunately, that some production lines in Radcliffe have been
affected by strike action by a section of the workforce and for several weeks
have, to a large extent, not produced. This has not affected sales to any
significant extent but has lessened our ability to take up some project
opportunities in overseas markets that would have required a fast response in
manufacturing.

 

Energy costs have significantly increased over the past year and the cost of
energy to us, as a manufacturer, are very significant. To put this in context,
the energy costs at the Radcliffe site are (in the four months to 31 October
2022) more than double the costs of the comparative period last year, despite
this year having eight weeks less production. Whilst support from the
Government on wholesale prices to business is welcome, our energy costs have
yet to hit the cap at which Government's support would be payable and even
then add on costs to wholesale prices are around an additional 40% charge and
are outside the scope of assistance.

 

These are very challenging times, especially here in the UK, and we have
tasked our teams to monitor costs and minimise cash outflows as high inflation
lingers. In the short term, and against this current climate, there has
obviously been margin erosion and we continue to pass on cost increases, as
much as possible. In addition, as noted above, commercial flooring demand is
robust.

 

There are challenges across our global markets but it is still early in our
financial year and historically the second half of our financial year is our
stronger.

 

I and the Board remain cautiously positive about the medium term prospects for
the Group as a whole."

 

- Ends -

 Enquiries:
 James Halstead:
 Mark Halstead, Chief Executive              Telephone: 0161 767 2500
 Gordon Oliver, Finance Director

 Hudson Sandler:
 Nick Lyon                                   Telephone: 020 7796 4133
 Nick Moore

 Panmure Gordon (NOMAD & Joint Broker):
 Dominic Morley                              Telephone: 020 7886 2500

 WH Ireland (Joint Broker):
 Ben Thorne                                  Telephone: 020 7220 1666

 

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