Trading Statement
July 07 2009 - 1:00AM
UK Regulatory
TIDMHYWD
RNS Number : 2148V
Heywood Williams Group PLC
07 July 2009
7 July 2009
Heywood Williams Group PLC
End of Period Trading Update
Heywood Williams Group PLC, the specialist distributor of branded building
products, issues this regular end of period trading update for the 6 months to
30 June 2009.
As anticipated, the Group continues to face very difficult market conditions due
to major declines in residential housing markets. Sales in the first half of
2009 are expected to be down 24% compared to the same period in 2008. It is
estimated that the residential housing markets that the Group operates in have
declined on average by 40% since the second half of 2007. The Group has reduced
headcount by over 35% in the same period. Net borrowings at the end of June were
circa GBP48 million, which is better than expectations and less than 2008,
reflecting the Group's success at managing working capital.
In the UK/Europe, the Group designs, sources and distributes branded hardware to
customers in the residential new build and home improvement markets with some
sales in the commercial market. New build and home improvement activities
reduced further across our UK/European markets in the first half of 2009, in
addition to the significant market declines experienced in 2008. Currently, the
Group's key markets are exhibiting signs of fragile stability, but at levels
30-50% below that experienced in late 2007. Our management teams continue to
work hard to outperform the market. Market share has increased and significant
cost reductions continue to be implemented to align the cost base with the
tougher market conditions we are now facing. Headcount has been reduced by a
further 17% since the end of 2008, which is in addition to the 22% reduction
made in 2008.
In North America, the Group, through LaSalle Bristol, is a market leading
distributor of branded building products to the manufactured housing,
recreational vehicle and modular housing markets. Both the manufactured housing
and recreational vehicle markets were severely depressed in the first half of
2009. The latest industry information is that the manufactured housing market is
down 46% year to date and the recreational vehicle market has fallen 57%
compared to 2008. To date, there has been no evident impact of the U.S.
government's fiscal stimulus in the markets we serve. The team at LaSalle
Bristol has reduced headcount by a further 9% since the end of 2008 and has been
highly effective in generating cash by reducing stock levels quickly in response
to reduced market demand. Despite a significant earnings impact, LaSalle Bristol
has been cash generative, is cash positive at the half year and has not borrowed
against the new dedicated $10 million line of credit announced earlier in the
year.
As previously announced, the Group reached agreement with its UK banking
syndicate on a medium term funding plan which covers the period to 30 June 2010
and includes revised covenants and the deferral of capital repayments under its
GBP60 million facility. This agreement allows the Group time to establish a more
appropriate long term capital structure but imposes penalties on the Group if
agreement on a satisfactory structure is not reached by 30 September 2009. All
our Divisions are operating within the revised covenants and have sufficient
facility headroom.
Work in establishing an appropriate long term capital structure for the Group is
proceeding to plan and the Group is currently reviewing a number of options, the
outcome of which could result in a material dilution for existing holders of
equity. In parallel to this work the triennial actuarial valuation of the UK
final salary plan has been brought forward and is currently underway.
Looking forward, the Board expects the UK/European businesses to continue to
perform in line with expectations for the full year. The Board now expects
market conditions in North America to reduce expectations at LaSalle Bristol and
modestly for the Group as a whole.
+------------+----------------------------------+--------------------------------+
| | | |
+------------+----------------------------------+--------------------------------+
| Contacts: | Heywood Williams Group PLC | Tel: 01422 328850 |
| | Robert Barr, Chief Executive | |
| | Mike Richards, Finance Director | |
+------------+----------------------------------+--------------------------------+
| | Financial Dynamics | |
+------------+----------------------------------+--------------------------------+
| | Jon Simmons/Sophie Moate | Tel: 020 7831 3113 |
+------------+----------------------------------+--------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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