Floored: Headlam blames UK market for a drop in like-for-like sales

British flooring firm Headlam posted mixed results this morning that saw like-for-like revenue decline in both the UK and Europe, reflecting weak sales in the UK residential sector.

The company also confirmed that it expects lower profits in 2019 due in part to “economic and political uncertainty”, after first warning of the hit in January.

Read more: UK construction activity declines amid 'Brexit anxiety'

The figures

Profit before tax slipped year on year from £40.7m in 2017 to £40.4m last year, while total revenue grew 2.3 per cent to £708.4m.

Net cashflow fell to £40m from 2017’s figure of £43.2m. Average net debt almost doubledfrom £9.2m in 2017 to £16.9m.

Basic earnings per share increased 2.3 per cent to 40p, and the total ordinary dividend climbed slightly to 25p, from 24.8p in 2017.

Why it's interesting

Headlam’s results come against the backdrop of a slowdown in UK construction and uncertainties over Brexit.

While the company’s revenue from continental European grew 5.3 per cent in 2018, representing 14.7 per cent of total revenue, revenue growth in the UK was just 1.8 per cent, making up 85.3 per cent of total revenue.

The company’s chief executive, Steve Wilson, pointed to weakness in the UK residential sector, where the company’s business is most heavily weighted. Headlam’s total revenue from the residential sector declined to 64.6 per cent, from 67.9 per cent in 2017.

Shares were flat at around 419p in early trading.

What Headlam said

Wilson said: “Despite the generally softer trading backdrop that was evident throughout 2018, it was pleasing that total revenue and underlying profit increased in the year. Our focus for 2019 and 2020 is operational and financial improvement through the pursuit of efficiency initiatives.”

Read more: EU faces the biggest risks from no-deal Brexit, says Carney

Headlam chairman Philip Lawrence said: “As announced earlier this year, 2019 is likely to present us with further general market weakness in the UK and an increased element of economic and political uncertainty. As previously announced, this is one of the factors contributing to our expectation that 2019 profits will be lower than 2018.”

He said the company retains “confidence”, and has “reiterated its commitment to a progressive dividend policy, with the 2019 dividend currently intended to be maintained in-line with that of 2018.”