March 1, 2012 / 10:56 AM / 6 years ago

UPDATE 2-Howden Joinery pays first dividend in four years

* Year end cash 57.1 mln stg, pays 0.5 pence dividend

* 2011 pretax profit 110 mln stg vs f‘cst 103-111 mln stg

* UK depot revenue 838.7 mln stg, up 5.5 pct, up 3.1 pct lfl

* Cautious about the immediate outlook

* Shares up 1.5 pct (Adds detail, CEO, analyst comment)

By James Davey

LONDON, Mar 1 (Reuters) - UK kitchen supplier Howden Joinery, a remnant of the MFI Furniture business, said it would pay a first dividend in four years, reflecting confidence in its future even though it is cautious on the immediate prospects for big ticket spending.

The firm, a supplier of kitchen units and joinery to about 250,000 small builders from 509 UK depots, said on Thursday that having ended 2011 with net cash of 57.1 million pounds, ($91.2 million) it would pay a dividend of 0.5 pence a share.

“We signaled last year that we intended to return to a very prudent dividend and that’s exactly what we’ve done,” Chief Executive Matthew Ingle told Reuters.

He dismissed analyst concern that the firm had not given a firm commitment on a dividend pay-out ratio for 2012.

“Howdens is about starting journeys and doing them carefully and thoroughly and not over-promising,” he said. “We are very cautious about what could happen in the year.”

Many Britons have been cutting back spending over the past year as price increases outpaced wage rises and higher unemployment weighed on confidence. The lack of consumption has been one of the main drags on economic growth.

However, latest official data showed retail sales rose in January. That data, a string of strong business surveys and stabilisation in the labour market have raised hopes of recovery in 2012.

Howden, which does not serve the retail market directly, focusing instead on selling kitchens at an average price of 2,500-3,000 pounds to trade customers, has fared relatively well during Britain’s consumer recession.

Shares in the firm have increased by more than a quarter over the last year as it has traded well and property liabilities relating to its previous ownership of MFI were mitigated. The stock was up 1.5 percent at 117.9 pence at 0952 GMT, valuing the business at about 756 million pounds.

“The group still has the opportunity to expand its branch network, and these take a number of years to mature which provides some visibility,” said Panmure analyst Andy Brown.

Howden made a pretax profit of 110.0 million pounds in the year to Dec. 24, in line with company guidance of 103-111 million pounds and up from 100.9 million pounds in 2010.

UK depot revenue increased 5.5 percent to 838.7 million pounds, with sales at depots open over a year up 3.1 percent.

However, Howden said like-for-like sales growth had slowed to 0.1 percent in the new year to Feb. 17, reflecting tough comparatives in the previous year.

Ingle, who sees scope for 700 UK depots, attributed the firm’s success to an “absolute focus on getting kitchens into homes the right way which is via the small builder.”

The complexities of modern kitchens meant consumers were increasingly seeking professional installation. “DIY, particularly today, is I think something to be careful of, certainly in a kitchen,” he said. ($1 = 0.6260 British pounds) (Editing by Neil Maidment and Helen Massy-Beresford)

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