Howden Joinery posts rise in first-half revenue but operating profit disappoints

Shares in kitchen trade supplier Howden Joinery fell despite the company posting a rise in pre-tax profit and revenue and saying it was well-placed to achieve expectations for the full year, with analysts pointing to disappointment over the operating profit.

Pre-tax profit came in at £59.2m, up from £57.2m in the same period last year, on revenue of £482.6m, up from £435.4m.

However, analysts expressed disappointment over the 6% rise in operating profit, which came in at £60.9m.

The company reported a dividend of 2.8p per share compared with 1.9p in 2014, while net cash came in at £223.3m at 13 June 2015, compared with £217.7m in December 2014.

Gross profit margin, meanwhile, was 63.7% from 63.2% last year, reflecting the benefit of exchange rate movements, although some of this was impacted by higher costs, with selling and distribution costs, administrative expenses and other income up by £28.8m to £246.4m.

Chief executive, Matthew Ingle, said: "Howdens has performed well, with sales increasing significantly in the first half. Cash generation remains strong, feedback from our depots is positive and we've seen a good start to the second half of the year.”

Atif Latif, director of trading at Guardian Stockbrokers, said the numbers were slightly below expectations and attributed some of the downside in the share price to selling after a strong performance into the results.

He said Thursday’s weakness in shares was a buying opportunity as the building materials sector could be on the cusp of a positive re-rating.

Numis Securities, which rates the stock at ‘add’, said pre-tax profit was just a touch below its estimate of £60m but not a significant miss.

At 1024 BST, Howden shares were down 4% at 497.50p.