"Strong and sustained recovery" - Headlam
March 9, 2021
Headlam, the UK's largest flooring distributor, recovered from a 30% crash in flooring sales in the first half of 2020 to turn a loss of £1.2m in those 6 months into a final profit of £15.9m for the year overall, following "exceptional performance from the UK residential sector."
Following that 30% sales hit in the first half of 2020, Headlam ended the year with annual trading levels 15% below those of 2019.
While 2020's full-year profits of £15.9m before tax are substantially below the 2019 profits of £39.5m, it suggests Headlam was trading at more "normal" levels for the second half of 2020, which is a positive achievement given the subsequent lockdowns and continuing uncertainty.
"Following the significant impact of COVID-19 on trading in Q2 2020, when the vast majority of the Company's operations were temporarily closed, the second-half was characterised by a strong and sustained recovery," said non-executive chairman Philip Lawrence as the group announced its final results for the year ended December 31, 2020.
"This demonstrated the resilience of our business, the commitment and tenacity of our people, and our ability to support customers during a difficult period,' he said.
The Group said its commercial sector was materially down for the whole year, albeit with an improvement in the second-half.
A positive arising from a hugely difficult year, is that the Board believes the Company has entered 2021 a stronger business. It said ongoing mitigating actions against the impact of COVID-19, including a more centralised approach to the management of costs; accelerated projects under Headlam's Operational Improvement Programme (OIP) and "improved levels of stakeholder engagement" will support the future success of the Company.
The OIP efficiency project Headlam has embarked on is being accelerated and is expected to generate savings of £4m in 2021 and £8m in 2022.
The results showed Headlam remained highly cash generative during the year despite the initial impact of COVID-19, with an increase in cash of £27.0 million (2019: £10.2 million decrease) and in part reflects the actions taken to preserve Balance Sheet strength. Average net debt for the year of £8.6 million (2019: £3.3 million) was also a material reduction on the first-half average net debt of £35.3 million.
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