‘Solid’ 2016 sees Howdens increase profits

Howdens Joinery has reported “solid results” in 2016, despite currency fluctuations and price increases following the Brexit vote.

In the 52 weeks to December 24, UK revenue increased by 6.5% to £1.28 billion, compared with a 4.2% rise over the same period in 2015. Group revenue grew from £1.22bn in 2015 to £1.3bn in 2016.

Operating profit rose from £221.9m in 2015 to £237.2m in 2016, while pre-tax profit also increased to £237m, from £219.6m the year before. Gross profit margin remained relatively flat at 64.2% (64.3% in 2015), despite adverse currency movement.

During 2016, the company opened 23 new depots in the UK, with an additional one being opened in early 2017 – bringing the total to 643.

It also extended its French trial by opening three new depots and a first in Germany.

Chief executive Matthew Ingle said: “Howdens delivered a solid set of results in 2016, despite softer trading conditions being seen in the second half. Sales grew to £1.3bn, profitability increased and our net cash position at the year-end was unchanged. As a result, we are recommending an increase in our dividend and announcing a new cash return of up to £80m to shareholders by way of a share repurchase programme.

“Performance in the last two periods (eight weeks) of the year reflected the implementation of a price increase towards the end of the year and two extra days trading.

“We have continued to invest in all aspects of the business, improving our operations and pursuing the growth opportunities before us, while making sure that our operations suit current market conditions. We are investing in our supply operations to ensure their resilience and in order to have sufficient capacity to enable us to take advantage of the prospects we see before us.

“We will continue to invest in the business, to ensure that we can take advantage of the longer-term growth opportunities that we foresee, and to address the challenges of a more complex market and security of supply. This investment will be in both our day-to-day operations and our supply chain capability.

“Looking at 2017, softer trading conditions seen in the UK in the second half of 2016 have continued into the early part of this year, with volumes having weakened slightly. We raised prices towards the end of last year in response to cost pressures in our business and the early signs from this are encouraging.

“As well as planning to open around 30 new depots in the UK, we will continue to invest in our supply chain capability.”

Ingle concluded: “We are mindful of the uncertainty surrounding the economic outlook and are well positioned to respond to a change in market conditions.”

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