James Halstead PLC on Thursday said profit came under pressure in its first half amid increases in raw material and energy costs.

Revenue for the half-year to December 31 rose 4.8% to £136.7 million from £130.4 million a year before. This sales figure was a ‘satisfactory achievement’ given the ‘turmoil’ seen in the first half.

‘There has been a small drop in profits for the period, and while disappointing, given the increased costs in both raw materials and energy, I can only describe this as a commendable result,’ the company said.

Pretax profit nudged down 2.3% to £25.4 million from £26.0 million. James Halstead’s gross margin dipped to 40.2% from 42.1%.

Not only were raw material costs higher in the period, but they were in short supply too. Further, labour was restricted and production capacity for periods was capped.

‘Margins have been under pressure and although we have undertaken price increases (with further increases due in 2022) these increases lag the costs with a consequent impact on profit. The lag is partly because of prices quoted on projects in advance, in part to allow stockists to look at their price lists and in part our reticence in facing unknown consequence of price increases on future demand,’ the company said.

Looking ahead, the firm said it expects that both inflation and interest rates will face upward momentum and passing on costs is a ‘necessary consequence’ that could dent demand.

‘With the caveat of the unknown effects of recent events on input availability and costs to our businesses, I am confident of progress in our business going forward, with sales performance continuing to be positive and many markets returning to a more normal footing,’ the firm said.

James Halstead declared an interim dividend of 2.25 pence, up 5.9% on the 2.125p paid out a year ago.

Shares were down 1.4% at 231.74p in London Thursday morning.

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