Headlam sees challenge meeting original goals

LONDON (Reuters) - Flooring distributor Headlam Group reported a small rise in first-half profit but said it might find it tough to hit its targets for 2008, sending its shares down more than 18 percent in early trading on Monday.

The Birmingham-based company reported pretax profit of 20.94 million pounds for the six months to June 30, up 1.7 percent from the 20.59 million in the same period last year, on revenue up 6.6 percent at 276.12 million.

At 8:37 a.m., the group's shares had fallen 60.5 pence, or 18.1 percent, to 273 pence, valuing the company at around 227 million pounds.

"Due to the unpredictable nature of the current market place, the board believes we face a challenge to meet our original trading objectives for 2008," Headlam said in a statement.

"Notwithstanding these difficult market conditions, we believe our structure and strategy, in conjunction with the commitment from our management teams and representatives, will enable us to continue outperforming the floorcovering market and increase our market share."

Headlam distributes floorcoverings for homes and businesses to independent retailers and contractors via 47 brands in the UK. It also operates from sites in the Netherlands, France and Switzerland.

It described its results for the first six months as "solid", saying the final four months of the year traditionally represented the highest sales volume and subsequently were the most profitable.

"However, in the last four months to the end of August, the markets have proved to be increasingly demanding, particularly in the UK," it said.

Headlam said although it had not completed any acquisitions during the year, it had continued talking to various businesses in the UK and continental Europe with a view to making further bolt-on acquisitions to add to and expand its business.