Samuel Heath & Sons PLC on Tuesday offered a somewhat bleak outlook for the rest of the year, outlining redundancy plans due to a depleted order book and reduced interim earnings.
Samuel Heath & Sons is a Birmingham-based shower and bathroom accessory manufacturer. Shares in the firm were down 15% at 340.00 pence each in London on Tuesday afternoon.
For the six months ended September 30, the firm reported pretax profit of £433,000, down from £521,000 a year prior. Operating profit fell to £441,000 from £610,000, while basic earnings per share were 16.2 pence, down from 19.3p.
Meanwhile, revenue rose 2.6% to £7.8 million from £7.6 million the previous year.
This disparity came as cost of sales widened to £4.3 million from £3.9 million year-on-year. Similarly, administrative expenses rose to £1.1 million from £1.0 million.
According to Samuel Heath, the main cost increases driving the fall in operating profit were a 37% increase in energy and utility costs, additional spending on tooling, and payroll growth.
The firm also explained that sales improvements were only possible because of an improvement in production efficiency, which restored output to the previous year’s levels and ‘caught up’ to the historical order book. It said that, in contrast to appearances, the order book is ‘now unfortunately much weaker than the prior year’.
Elaborating, Samuel Heath told investors on Tuesday that the order book has been running ‘consistently below management budget’ since June. The only area of continuing confidence ‘appears to be the US’, the firm said, adding that there is ‘no guarantee’ this will continue.
In light of these difficulties, Samuel Heath has decided to enact cost reduction measures, namely cutting 7% of its workforce.
The firm proposed an interim dividend of 4.5p per share, down from 5.5p year-on-year.
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