Headlam Group plc, a UK floorcoverings distributor, has announced its results for the first six months of the year to 30 June 2024 and launches the acceleration of its strategy through a transformation plan to simplify the business and enhance the customer offer, generating at least £15 million of annual profit improvement and £70 million of one-off cash benefits.
Commenting on the results, Chris Payne, CEO, says, 'The challenges impacting the flooring market have been well documented and are fully reflected in Headlam's performance in H1 2024. Nevertheless, the Group has made good strategic progress and whilst these highlights are masked by external headwinds, it is particularly pleasing to see growth across the Group's Larger Customers and Trade Counters.
Photo: Headlam Group.
'As a UK market leader, drawing on a heritage of over 30 years, a large and diverse customer base, and long-established supplier relationships, Headlam has a unique long-term opportunity. Whilst we cannot control the macro-economic environment, we can continue to adapt and evolve the business to take full benefit of the market recovery. I'm therefore pleased to announce today an acceleration of our strategy with a 2-year transformation plan to make Headlam a more effective organisation by simplifying our offer to customers and how we operate. As we unlock cash and costs from our business, we will further invest in the proposition across all our customer groups in order to grow market share and strengthen our position as the UK's leading floor coverings distributor.'
'Looking ahead, the lead indicators for consumer spending on home improvements are more positive, albeit the timing of recovery remains uncertain and is likely to be later than previously anticipated. However, with our new transformation plan underway, our teams are laser focused on realising the benefits which will start to take effect in 2025, positioning the Group to emerge strongly when market conditions improve. We remain confident in the long-term outlook for the Group and look forward to announcing further progress against our plans in due course.'
Key highlights:
Acceleration of strategy through two-year transformation plan
Acceleration of existing strategy through a two-year plan to transform the business. This plan will simplify our customer offer, network, and operations; improving profitability, increasing market share, and releasing capital from more efficient working capital management and the disposal of non-core property.
The benefits of the two-year transformation plan are expected to be the release of at least £70m cash from disposal of surplus property and optimisation of net working capital. Also, the ongoing profit improvements of at least £15m, with benefits starting to be realised during 2025 and fully achieved as a run-rate by the end of two years; as well as the increase in market share from investment in customer proposition.
Financial highlights:
H1 results are in line with expectations. Revenue declined 11.8% year-on-year with the UK down 11.3% and Continental Europe down 15.9%. There was a strong cash generation with positive Underlying Operating Cash Flow of £18.0m. Group revenue for July and August declined 8.4% compared to an 11.8% decline for the first six months, supported by four consecutive months of reduced revenue decline in Regional Distribution.
Looking ahead:
Looking ahead, the lead indicators for the market are more positive, but the timing of market recovery remains uncertain and looks to be later than previously anticipated, with a return to growth now expected at some point during 2025. The long-term outlook for Headlam remains positive.
More information:
Headlam Group
[email protected]
www.headlam.com