Howden Joinery sees better than-expected annual profits

5th Nov 2014 09:50

Kitchen manufacturer and wholesaler Howden Joinery forecast better-than-expected profits after a good second half, boosting its shares.The FTSE 250-listed group said it had seen a good sales performance throughout the second half of the year, including during the important October trading period."As a result of this, we now expect profit before tax for the year to be above the range of market expectations," the group said in a trading update. However, it added a note of caution, saying the rest of the year typically made up more than 10% of annual revenues.Howden Joinery UK depots' total revenue in the second half of the year to 1 November increased by 16.2% in the face of toughening comparable figures since the start of the second half of the year.As a result, in the first 44 weeks of 2014 to 1 November, total revenue was up 14.1%, rising 10.6% on a same depot basis.In the UK, Howden Joinery sells kitchens and joinery products to trade customers, primarily small local builders, through 580 depots. About one-third of the products it sells are made in the company's own factories in Runcorn, Cheshire, and Howden, East Yorkshire. The business also has a small operation in France.It opened 4 new depots, resulting in 21 new depots in the UK so far this year and bringing the total to 580. "We are on course to open 30 new depots as expected in the whole of 2014," it said.Broker N+1 Singer the raised guidance would mean full year growth of around 13%, or 9.5% on a LFL basis, compared to its forecast of 10% and 7.3% LFL, "meaning full year sales will be some £30m and profits some £10m higher than expectations".Looking to next year, analyst Matthew McEachran said recent trends were "extremely encouraging", with EBITDA margin forecast to grom from 18.5% in the current year towards 20% over the next couple of years."We continue to be highly attracted to the Howden proposition given the format's strength and flexibility versus weaker competitors. Improved consumer confidence, end market recovery and few remaining legacy liabilities makes for a strong investment case."