Kitchenware supplier Howden Joinery Group's share price closed down 0.52 per cent today after the company posted strong profit growth, but said it had been forced to increase its product prices.
Group revenue rose from £1.22bn in 2015 to £1.3bn last year, a growth of seven per cent. Profit before tax was up eight per cent, from £237m to £219.6m. The full year dividend came to 10.7p per share (2015: 9.9p).
Why it's interesting
The devaluation of sterling is expected to push up the cost of goods such as electricals and furnishings because these are largely imported. Howden, which sells kitchenware and flooring to tradesmen, said today that cost pressures had forced it to increase its prices, but that the early signs of the changes were "encouraging".
And, aside from cost pressures, the group also warned that it was facing weakening trading conditions.
Matthew McEachran at N+1 Singer said:
Whilst conditions and volumes have softened so far in the first quarter, notably in the London area rather than nationwide, price increase at the end of 2016 have not been resisted and forecasts therefore look about right.
What Howden said
Chief executive Matthew Ingle said: "We will continue to invest in the business, to ensure that we can take advantage of the longer term growth opportunities that we foresee, and to address the challenges of a more complex market and security of supply.
"Looking at 2017, softer trading conditions seen in the UK in the second half of 2016 have continued into the early part of this year, with volumes having weakened slightly."