Weak residential market expected to hit profits at flooring distributor Headlam
Shares in floor covering distributor Headlam sank as much as 10 per cent on Wednesday morning after it predicted that a weaker residential market would hit profits in 2019.
Europe's largest distributor of floor coverings said that it now expects underlying profit before tax in 2019 to be between £39m and £41m, lower than in 2018.
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The company cited “pressure on distribution costs and administrative expenses”. Revenue for the current financial year is expected to be in line with 2018.
Shares later recovered to a 1.5 per cent drop to 394p.
Steve Wilson, Headlam's chief executive, said: “In the face of a year which presents general uncertainty, a high degree of difficulty predicting any outcome, and an anticipation of further weakening in markets due to the wider economic environment, I believe we are taking a prudent view.”
Wilson confirmed that the company intends to maintain its dividend and said that this was “testament to our belief in the strength of the business”.
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Charles Hall, head of research at Peel Hunt – which has maintained its “hold” recommendation for Headlam – said that although the trading update was “not positive news” he did not expect further volatility in the share price.