Howden picks up pace in second half

The Yorkshire-founded firm, a supplier of kitchen units and joinery to over 250,000 small builders from 544 depots, said total revenue rose 10.7 per cent in its second half to November 2.

That meant total revenue in the 44 weeks to November 2 was up 9.3 per cent, rising 7.1 per cent at depots open at least a year, with gross margin in line with expectations.

“As a result of this, we now expect profit before tax for the year to be around the upper end of the range of market expectations,” the firm said, noting analysts were currently forecasting a profit before tax and one-off items of £122m-134m. It made £112m in 2012.

Shares in Howden have increased 89 per cent over the last year, helped by robust trading on the back of Britain’s improving housing market, while property liabilities relating to its previous ownership under MFI have been mitigated.

Alexander Mees, analyst at JP Morgan Cazenove, said: “In our opinion, Howdens is a business with a highly efficient supply chain, a strong focus on a single customer type – the small builder – and considerable capacity for future growth.

“Without the tailwind of macroeconomic growth in the UK, Howdens has grown earnings over the past few years through a combination of market share gains, expansion of the network and depot maturation.

“We believe it may now benefit materially from a recovery in the market for kitchen installations driven by increased household disposable income and supported by increased housing transactions.”

Yorkshireman Matthew Ingle founded the business in 1995 in Howden. The group has a factory in the East Yorkshire town employing 700 people and 30 depots across the region, bringing the Yorkshire workforce up to nearly 1,000 people.

Matthew McEachran, analyst at N+1 Singer, said: “We continue to be attracted to the Howden proposition. Given the strength and flexibility of the format compared to weaker competitors, the improving profile of legacy liabilities, and chinks of light in the UK housing market, the investment case is clearly stronger than it has been in the past.”