- Flooring specialist adds to dividend growth streak that extends to 1974
- Bury-based firm reaps benefits of investment and operational efficiencies
- Boardroom changes provide further evidence of continuity
- Balance sheet remains net cash
“There may be changes in the boardroom at James Halstead, but the appointments for chair, chief executive and finance director all look every bit as carefully planned as the flooring specialist’s ongoing investment in its business, in terms of energy efficiency, cost control and product,” says AJ Bell investment director Russ Mould. “The latest round of operational improvements means the AIM-quoted company is able to report an increase in full-year operating profit, despite a drop in sales and supply chain challenges, and add to a growth streak in its annual dividend that dates back to 1974.
Source: Company accounts, Marketscreener, consensus analysts’ forecasts. Financial year to June.
“Only 2021 – a bit of a catch-up year after the rigours of Covid-19 in 2020 – has seen a faster rate of dividend growth in the past seven years, which speaks loudly of management’s confidence in the future. And continuity remains the watchword when it comes to management at the Bury-based concern, founded by the eponymous James Halstead over one hundred years ago.
“The family still owns a sizeable stake and Mark Halstead is stepping up to the role of executive chair upon the retirement of Anthony Wild, after his seven-year stint in the post (and more than two decades as a boardroom director). Mark Halstead is changing role after 22 years and finance director Gordon Oliver will take on the role of chief executive, after 25 years on the board. David Drillingcourt will become the new chief number cruncher. He joined the board in January, presumably with this carefully planned transition in mind.
“This experience, and the long-term planning which the family interest facilitates and encourages, is enabling the company to cope with input cost inflation, economic uncertainties, disrupted shipping lanes and more besides.
“Profit margins rose even as sales fell, thanks to manufacturing efficiencies and investment in process improvement, and the company has continued to work on this, as evidenced by the roll-out of LED lighting and planned deployment of solar panels at two different factories. James Halstead’s operating return on sales of 19.6% is the highest mark since 2017.
“Meanwhile, ongoing investment in its product range, where Polyflor, Camaro, Palettone and Polysafe are among the flag-bearers, continues to pay off, as shown by contract wins in countries ranging from Kuwait to Colombia, Greece to Iceland and the UAE to Italy.
Source: Company accounts. Financial year to June.
“The balance sheet is a further source of support for the increased dividend, on two counts.
“First, management continues to whittle down inventory and release cash. During lockdowns and a period of fractured supply chains and tight shipping availability, the £735 million cap company took on extra stock to reassure customers and ensure they were not disappointed when they placed orders.
“Management continues to carefully run down some of that stock. The full-year results showed a second consecutive decrease, down to £82.3 million, from £87.4 million at the end of the last fiscal year. That is well below the peak of £112 million seen in June 2022.
Source: Company accounts. Financial year to June.
“Second, James Halstead remains very well resourced.
“The balance sheet shows £74 million of cash and no debt, lease obligations of just £6.4 million, and no pension deficit. Such robust finances should see James Halstead through any economic squall and feast upon any weakness among its rivals.”
Source: Company accounts. Financial year to June.
