Dull Hepworth shines through

Investment Column

Hepworth's interims yesterday brought the building sector's results season to a close - more with a whimper than a bang, it has to be said. After the flood of disappointments and warnings in the last month or so, the market was relieved to see the boiler and pipes group producing flat profits, but the 23p rise in the share price to 277p could not disguise the fact that these were dull figures from a directionless group.

Though boring, Hepworth is well-run, produces enough cash to fund its dividend payments and has a couple of fine boiler businesses shining out from the uninspiring rest of the group - refractories, chemicals, ladders and greenhouses. This shone through in half-time pre-tax profits yesterday, up 5 per cent to pounds 37.5m, struck from sales of 3377.1m (pounds 338.6m).

Building products, including plastic and clay plumbing and drainage, countered the slow UK housing market with strong exports and pushed through some price rises. Gas boilers maintained profits despite falling demand and pressure on prices. Saunier Duval saw margins slip in mixed European markets for boilers but made gains in market share.

The small refractories business was the star performer, with profits almost doubling to pounds 3.7m from pounds 2.1m as sales moved ahead strongly on the back of demand from aluminium, glass and steel-making industries. Minerals and chemicals had a good half.

After a 3 per cent earnings rise per share to 10.5p, the interim dividend was unchanged at 5.5p. Gearing is immaterial at 9 per cent and interest well covered 35 times by operating profits.

But Hepworth desperately needs a decent sized acquisition to give its earnings some momentum again. Only that would reverse the derating that the market has inflicted on the shares over the last 18 months during which the shares have all but halved from a high of 501p.

Since the Saunier Duval acquisition in 1990 the company has done little to suggest that its management has any strategic ambition and it will struggle to shake off its worthy tag.

Until it does so, the shares are likely to tread water. On the basis of forecast pre-tax profits of pounds 73m this year and pounds 82m next time, they trade on a prospective p/e of 12, a small discount to the rest of the market.

The only interest is provided by a forward yield of 6.7 per cent, but with no growth pencilled in for the payout, even that is unlikely to do more than underpin the current price.

Tourist boost to Hamleys profits

Hamleys, owner of the famous London toy shop, has done well to insulate itself from the chill winds blowing through the rest of the retail sector. Admittedly, the near quintupling in profits to pounds 5.65m over the last three years was in part due to the obvious strengths of the brand name. But management led by Howard Dyer, formerly of Williams Holdings, have also used the name sensibly to target the shopper willing to spend a bit more for service, principally tourists.

So while others moaned about the hot summer, Hamleys has cashed in on the back of a 10 per cent rise in overseas visitors this year.

Pre-tax profits jumped from pounds 676,000 to pounds 1.68m in the six months to the end of July on sales 24 per cent ahead at pounds 11m. The half-way dividend is hoisted 35 per cent to 2.7p.

The principal beneficiary has been the flagship Regent Street store, where high operational gearing meant that a 15 per cent rise in sales translated into doubled profits on exactly the same selling space. With a further 1,000 square feet of capacity due in the New Year and only four out of 10 visitors to the shop converted into sales, further growth seems assured.

Hamleys' expansion plans beyond London are now looking much more focused on its target audience than attempts in the 1980s to open stores for all and sundry on the high street.

Satellite operations at Heathrow airport and Covent Garden have seen sales grow by 11 and 22 per cent respectively and margins are probably close to the 15 per cent being achieved at Regent Street, while two operations started this year at the Channel Tunnel terminal at Folkestone and Schiphol airport in Amsterdam are already making money.

Losses in the House of Toys concessions within House of Fraser stores were budgeted and the offshoot is on target to increase its contribution in the full year.

The second half has got off to a good start, with trading running ahead of 1994. As ever, Christmas remains crucial to the full year, but profits should top pounds 6m, putting the shares at 287p, up 6p, on a forward multiple of 15.

They have come a long way since last year's placing at 185p, but still look reasonable value.

COMPANY RESULTS

Turnover pounds Pre-tax pounds EPS Dividend

BCE Holdings (F) 9.15m (3.73m) 0.97m (-0.80m) 0.51p (-2.84p) 0.09p (nil)

Bruntcliffe Aggregates (I) 11.8m (9.4m) 0.86m (0.79m) 1p (0.9p) 0.4p (0.4p)

CLS Holdings (I) 12.9m (10.4m) 4m (8.37m) 4p (3.3p) 2.1p (0.4p)

French Connection (I) 33.3m (34.7m) 1.3m (3.1m) 3.5p (8.1p) nil (nil)

Frogmore Estates (F) 72.4m (66.9m) 14.9m (16.5m) 22.4p (29.8p) 18p (17p)

Gieves Group (I) 9.43m (9.13m) 2.27m (0.52m) 8.9p (1.5p) 0.75p (0.5p)

Hamleys (I) 11.0m (8.91m) 1.68m (0.68m) 5.1p (2.7p) 2.7p (2p)

Hepworth (I) 377m (339m) 37.5m (35.6m) 10.5p (10.2p) 5.5p (5.5p)

Huntleigh Tech (I) 47.5m (35.4m) 7.17m (5.26m) 16.82p (12.18p) 3p (2.75p)

Ruberoid (I) 107m (108m) 2.7m (2.2m) 3.6p (3.2p) 1.9p (1.8p)

(Q) - Quarterly (F) - Final (I) - Interim

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
Life and Style
Parker says: 'I once had a taster use the phrase 'smells like the sex glands of a lemming'. Who in the world can relate to that?'
food + drinkRobert Parker's 100-point scale is a benchmark of achievement for wine-makers everywhere
News
i100
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing