03 November 2010
Howden Joinery Group Plc ('the Group') is today publishing its Interim Management Statement covering the period from the end of the first half of the year (13th June 2010) to date.
The Board is pleased to report that the business has continued to perform well and has delivered good performance on key measures, particularly during the crucial October trading period (period 11). In addition, further 'legacy' property agreements have reduced aggregate future costs by more than £20m.
Trading conditions have remained stable since the end of the first half of the year.
Sales between the end of the first half of the year and the end of October (periods 7 to 11) from Howden Joinery UK depots were 6.7% higher than the corresponding periods last year. In our important period 11, which ran from 4th to 30th October, sales of over £140m were more than 2 ¼ times the average seen in the preceding periods, which is a typical pattern.
In the first 11 periods (44 weeks) of 2010, ending 30th October, Howden Joinery UK depots' revenue was up 4.9%, rising 3.6% on a same depot basis. This performance reflects the previously reported impact of the cold weather seen in the first two periods of the year (to 20th February). Since that date, total sales have increased by 6.4% year-on-year.
We have continued to focus on gross profit margin throughout the business. Along with the benefit seen from the price rise implemented earlier in the year, this has meant that the gross profit margin has continued to improve since the end of the first half of the year.
Since we released our 2010 Half Yearly Report in July 2010, we have opened a further four new depots, resulting in 20 depots being opened so far this year and bringing the total to 482. We are on course to have around 490 open by the year-end.
The Group continues to manage proactively its 'legacy property' portfolio, the liability for a further four properties having been removed since the publication of the Half Yearly Report. These transactions involved making cash payments to the landlords of the properties totalling £4.5m, in return for being released from all obligations in respect of these leases. In so doing, total future costs of over £20m have been mitigated.
For the year to date, the number of legacy properties has been reduced by 13 to 42, involving cash payments to the landlords totalling £19m and thereby mitigating total future costs of over £70m.
There have been no other material changes to the financial position of the Group in the period save as a result of the usual impact of the level of trading and those matters disclosed herein.
We are encouraged by the strength of our performance this year but remain cautious about the outlook for 2011, given the continuing uncertainty about the prospects for economic recovery and the previously noted input cost pressure that is being observed.
In respect of the remainder of this year, sales in the last two periods are generally lower than other periods. Even so, sales in those periods are usually in excess of 10 per cent of annual turnover.
We now expect profit before tax for the year to be ahead of current market expectations.
Next scheduled announcement
The Group will release its 2010 Preliminary Results on 3 March 2011.
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