Results round-up

DFS Furniture posted a near-50% plunge in full-year pre-tax profit on Thursday as the retailer was hit by the heatwave in the fourth quarter.

In the year to 28 July, pre-tax profit dropped 48.5% to £25.8m due to an "exceptional downturn" in market demand in the final quarter. The company said continued economic uncertainty for consumers, compounded by some exceptional hot weather over key trading periods in the fourth quarter, resulted in sales and profits for the full year falling below its expectations.

The group was also hit by container shipping delays at Felixstowe port.

Revenue including acquisitions was up 14.1% to £870.5m, driven by the purchase of Sofology last year, but excluding acquisitions, it was down 2% to £747.7m. Meanwhile, underlying earnings before interest, taxes, depreciation and amortisation declined 7.6% to £76.1m and underlying earnings per share dropped 25.1% to 14p.

Chief executive officer Ian Filby said: "We have continued working to develop the group's strategic and market position; however financial results for the year reflected the exceptional downturn in market demand we saw in the fourth quarter.

"We are pleased to note that the market has recovered since the start of the new financial year, with the group seeing like-for-like order growth across all brands over the first nine weeks. We believe, however, we are benefiting from deferred purchases in the prior financial year and overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment. Notwithstanding this we believe the group is well positioned to become stronger in this current environment, boosted by investment and acquisition benefits, and we have excellent prospects for profitable growth and attractive cash flow generation over the longer term."

Lee Wild, head of equity strategy at Interactive Investor, said: "We were warned in July that business was tough and that the hot weather was bad for business, which explains these sub-par results. Container shipping delays at Felixstowe didn’t help, but the worrying thing for DFS is the ‘exceptional downturn in market demand’ during the fourth quarter.

"While orders are up in the first nine weeks of the new financial year, don’t get excited. These are likely just deferred purchases, so expect more of the same Brexit and consumer downturn stories over the next six months."

Jefferies, which has a 'buy' rating on the stock, noted the pick-up in order intake in the last nine weeks. "As a result, and assuming some recovery in 4Q19, we raise our FY19 revenue estimate by 2% to £974m and FY19E EBITDA by 1% to £93m. Our FY19E profit before tax rises 5% to £49m, though we expect limited changes to consensus estimates of circa £50m".

British IT services provider Redcentric told investors on Thursday that trading had been in line with expectations throughout the first half of its trading year.

Redcentric said its continued focus on delivering reliable services for its clients while improving operational performance had helped it maintain strong cash flows throughout the period.

As a result, Redcentric said it had successfully reduced net debt from £27.7m to £22.6m in the six months leading to 30 September 2018.

The AIM-listed outfit will report its interim results on 22 November.

In its previous full-year results, Redcentric reported revenues of £100m, of which approximately 87% was recurring, and an EBITDA of £18.1m.