Last checked at 2 Mar 2009 07:00
James Latham plc
Trading Statement
The Directors of James Latham plc have reviewed the current trading results and announce that, for the year to 31 March 2009 while revenue is expected to be broadly in line with market expectations, profits are likely to be lower than expected.
As reported with the half yearly results, revenue showed a small reduction in October when compared with last year and this trend has continued in the months which followed. The turmoil in the financial markets has had a sudden and wide-ranging impact on consumer confidence, particularly in the construction and transport markets. Trading margins remained at satisfactory levels until the end of December although the weakness of sterling increased the purchase cost of some products. We have seen an unprecedented number of company failures, leading us to increase bad debt provisions, and credit insurance for many customers has been withdrawn or reduced.
Margins on commodity items, such as hardwood and coniferous plywood, have fallen sharply in 2009, in spite of the weakening of sterling, as our competitors seek to turn surplus stock into cash and purchase prices continue to fall. Margin levels are expected to return to more normal levels within the next few months once this surplus stock has been worked through the market. It is still unclear whether the markets we serve have reached the bottom of the current cycle. We enjoy close and long-standing relationships with our suppliers who are supporting our strategy of focussing on markets for higher value products.
Our new Scottish branch continues to build revenue, but as expected will not achieve profitability during the current financial year, in addition the recent moves to larger premises at Fareham and Dudley will take time to repay the investment made.
In light of the worsening trading conditions, we have implemented a programme of cost reduction measures and are keeping costs under regular review.
The board has a policy of maintaining a strong balance sheet. As at 25 February 2009, cash and cash equivalents amounted to £7.5m, up from £4.6m at 30 September 2008.
Our strong balance sheet and wide base of customers, serving different sectors of the economy, will stand the company is good stead when the trading environment stabilises. Current trading condition will put strain on many of the competing companies serving our markets and we are confident that trading opportunities will develop.
For further information please visit www.lathams.co.uk or contact:
James Latham Plc Tel: 01442 849 100
Peter Latham, Chairman
David Dunmow, Finance Director
Blue Oar Securities Plc - Nomad and Broker Tel: 020 7448 4400
Andrew Raca, Corporate Finance
Jerry Keen, Corporate Broking