James Latham reports solid performance in year-to-date
Timber, panels and decorative surfaces company James Latham updated the market on its trading on Wednesday, reporting revenue of £127m in the first four months of its financial year.
The AIM-traded firm said that result for the period from 1 April to 31 July represented an increase in sales per working day of 34% compared with the three months ended 31 March.
It said global demand for timber remained high, which had resulted in increased prices and shortages that had not been seen in the industry previously.
“We continue to see large increases in container rates which have caused significant increases in the costs of our imported products,” the board said in its statement.
“Volumes per working day are up 11% from the three months ended 31 March, demonstrating that we have been able to meet the demands of our customers.
“Our aim throughout this period has been to ensure that our loyal customer base is kept supplied with product, despite the supply difficulties in the market.”
James Latham said its ability to secure enough volume of products from its key suppliers, and the “unprecedented” high demand, had resulted in improved margins.
Overheads were said to be “well-controlled”, with the level of bad debts “very low”.
“Transport continues to be difficult with a shortage of drivers available for us and our hauliers, but everyone in the business has worked hard to successfully maintain our service levels at the same high standard as our customers would expect.
“This revenue and margin increase together with our control of overheads has resulted in profit before tax for the first four months of this year being approximately the same as we achieved for the whole of the last financial year, namely a profit before tax of £18.6m.”
The company said its strong cash position helped to finance increased inventory levels to meet demand, although the supply difficulties meant that it needed to invest in inventories which were increasingly taking longer to arrive in the UK and be available for sale.
“Our customers remain busy, but there are concerns that shortages in other construction products will mean that there are likely to be delays on projects which will affect some of our customers.
“The board is very mindful that the timber industry has seen market conditions that are unlikely to ever be repeated, and more normal trading conditions will return, but at this stage we are cautiously optimistic that demand will be strong for the rest of the calendar year, but that margins will come under increasing pressure.”
James Latham said it would report its interim results for the six months ending 30 September on 25 November.
At 1415 BST, shares in James Latham were up 9.22% at 1,327p.