Floorcoverings supplier James Halstead (LON: JHD) reported annual figures slightly ahead of expectations. Even so, there was only a small increase in profit, and it will be difficult for the AIM-quoted company to maintain that profit this year.
In the year to June 2022, revenues grew from £266.4m to £291.9m, while underlying pre-tax profit improved from £51.3m to £52.1m. Net cash was £52.1m at the end of June 2022. Total dividends were 7.75p a share, up from 7.63p the previous year.
The international markets generally grew strongly. A major competitor has gone into receivership.
Forecasts
So far in the financial year demand continues to be strong and prices have been increased. Forecast revenues have been increased. The weak pound means that materials costs will rise on top of energy cost increases, although the exchange rate could help exports.
Although revenues are forecast to grow to £321m, much of that reflects inflation and admin costs are expected to grow at a faster rate. The forecast 2022-23 pre-tax profit is £51.1m. The dividend should be maintained, and it should still be more than 1.2 times covered by earnings.
The shares fell 2.5p to 204p. They are trading on nearly 22 times prospective earnings, while the yield is 3.8%.
The prospective multiple is relatively high, but it is much lower than in the past. James Halstead has shown that it can cope with economic uncertainty and has a good track record in good and bad times.