Howden Joinery Group (HWDN) H2 2011 earnings summary

Executive summary

• Sales rose 5.5% to £853.8m and operating profit increased to £114.3m; gross margin remained broadly steady at 59.5%.

• Cash at year end increased to £57.1m from £35.0m, supporting continued investment and legacy obligations; a final dividend of 0.5p per share was recommended.

Financial highlights

• Revenue £853.8m vs £807.9m; gross profit £508.3m vs £483.0m; operating profit £114.3m vs £107.4m.

• Profit before tax £110.0m vs £100.9m; profit for the period £81.1m vs £66.9m.

• Continuing-operations EPS 13.4p vs 11.1p; EPS including discontinued operations 12.1p vs 11.1p, with a £7.8m after-tax discontinued-operations loss in 2011.

• Gross margin was 59.5% vs 59.8%; price added £19.0m and volume/mix £14.9m to gross profit, offset by £8.6m of cost pressures.

• Operating costs increased £18.4m to £394.0m, including one-off cost savings of £5m; net interest expense fell to £4.3m from £6.5m.

Outlook and guidance

• Sales in the first two periods of 2012 rose 1.6%, with LFL sales up 0.1%; performance reflected a strong 2011 comparator.

• The market was expected to remain challenging; plans called for cautious development, depot openings in tranches, and timely actions as conditions evolve.

• Priorities included improving stock efficiency, reviewing slower-selling ranges, and keeping operating and capital costs under review while continuing growth investment.

• Pension finance charge expected to increase by £4m in 2012.