James Halstead confirms second dividend as markets recover
Commercial flooring company James Halstead updated the market on the financial year ended 30 June on Thursday, reporting a recovery in demand in its UK business, to around 80% of the prior year in June, and declaring a second interim dividend.
The AIM-traded firm said the UK market, which represents between 30% and 35% of its turnover, faced “significant” disruption, with almost all of its customers there being distributors, and many closed through April and May.
Turnover in those months dropped by up to 65% year-on-year, although the company continued production to focus on the type of product that was expected to remain in demand.
The company’s direct exports continued through the pandemic, with a reduction of between 5% and 10% year-on-year for April and May.
In terms of the company’s overseas based businesses, most continued to trade, although with reduced staffing levels.
James Halstead said that in the core lock-down period of April and May, sales were around 20% below the prior year comparative, with the full lockdown in New Zealand having an effect.
In June, its overseas businesses recovered to 90% of the prior year.
“The preparations made by many governments for the onset of the pandemic did lead to an uplift in the sales of our product to the health and medical research sectors,” the board said in its statement.
“Normally this sector would represent around 30% of our sheet vinyl sales but from April to June it was much more significant.
“As well as the supply of sheet vinyl to the NHS across the UK and significant supplies to Ireland, we have supplied new hospital facilities across the globe including Brazil, Argentina, Chile, Mexico, Italy, South Africa, Qatar and the United Arab Emirates.”
That, however, was not sufficient to offset the shortfall in business of other sectors, which were closed.
In terms of overall turnover during the April to June period, James Halstead said it averaged just over 70% of the prior year, and looking at the bottom line, profit before tax was just under 50% of the prior year comparative, while cash levels were preserved, according to the board.
“July has seen the position in terms of trading continue to improve as the distribution base in the UK started to fully reopen, and in recent weeks we have seen UK sales average over 90% of the comparative.
“Looking at our main businesses overseas - Germany, Australia and New Zealand - the level is near parity with the comparatives.”
The board said it was still too early to be confident that the worst was over, but it said it was clear that to date, the situation was “far better” than it had envisaged four months ago.
“This has been one of the most testing periods in our long history and many of our staff have put in the most commendable of efforts mobilising direct shipments not just across the UK but to far parts of the world.”
In its interim statement, James Halstead said it would declare a first interim dividend of 2.125p per share, representing half the dividend it would otherwise have declared, and to review an equivalent payment of a second interim.
Those dividends reflected a first half of record sales and profit.
“Given the improvement in trading conditions and the cash levels we, as a board, are sufficiently confident now to declare a second interim dividend of 2.125p, which will be payable on 10 September to shareholders on the register at 21 August,” the board confirmed.
At 1601 BST, shares in James Halstead were flat at 510p.