Floorcoverings distributor Likewise Group (LON: LIKE) finished 2022 strongly with more than doubled revenues. Market share has reached 6%, which is high enough to make the AIM-quoted company number two in its market.
Acquisitions were behind most of the growth in revenues to £124.4m, but like-for-like sales were still 26% higher. That is impressive considering that the market probably contracted last year. The sales team has been expanded and this is starting to pay off. Margins have declined and pre-tax profit should improve from £1.6m to £2.5m.
The focus is on organic growth and taking advantage of the investment in additional capacity. The new Glasgow distribution site opens in a few weeks.
The 2023 pre-tax profit is expected to be flat even though revenues are forecast to be 10% higher at £136.6m. Higher depreciation charges due to capital investment are the main reason for the flat profit and cash generation will increase significantly in 2023. These forecasts have not been changed, so there could be potential for them to be upgraded later in the year if momentum continues and margins improve.
The share price rose 5.1% to 20.5p, which means that the shares are trading on 23 times prospective earnings. Utilising more of the distribution capacity should accelerate earnings and cash flow growth in the next few years.