Howden Joinery Group (HWDN) H2 2006 earnings summary

Executive summary

• 2006 marked a turnaround: continuing-operations revenue rose to £733.0m from £621.8m; adjusted operating profit increased to £65.7m from £54.1m.

• Re-centred the business on Howdens, reduced net borrowings to £4.1m and set out growth plans including 60 new depots in 2007.

• Reported loss after tax and exceptional items was £170.7m, reflecting substantial discontinued-operation and disposal costs.

Financial highlights

• Continuing-operations revenue £733.0m, up from £621.8m; gross profit £362.5m vs £322.5m; adjusted PBT £57.2m vs £42.5m.

• Adjusted net profit after tax from continuing operations was £36.3m vs £27.9m; tax charge £20.9m vs £14.6m.

• Continuing-operations exceptional items were £32.2m expense before tax in 2006 vs £12.7m in 2005; after-tax profit was £6.1m vs £6.3m.

• Total loss after tax and exceptional items, including discontinued operations, was £170.7m vs £125.4m.

Outlook and guidance

• Early-2007 Howdens sales rose 8.2%, including same-depot growth of 4.4%; gross margin was similar to 2006.

• Plan to open 60 depots in 2007; growth expected from mature and newer depots, new locations, expanded product ranges and new customer formats.

• Supply expected to benefit from 2006 outsourcing, with results dependent on MFI demand; transitional arrangements with MFI were operating satisfactorily.