James Halstead costs rise as some production staff strike

Commercial flooring company James Halstead said in an update on Thursday that sales in most of its markets were ahead of last year’s performance.

The AIM-traded firm, which was holding its annual general meeting, said that over the same period, its stock levels had reduced by more than 10%.

Chairman Anthony Wild said that additionally, it had been a mild autumn, with the energy crisis not further escalating.

“International shipping rates have started to reduce and availability of shipping has improved,” Wild told shareholders.

“We anticipate that shipping rates will remain lower in the near-to-mid term.

“Moreover, the fall in the value of sterling has offered a competitive advantage in exports.”

The company said the adverse effects of the energy crisis on the supply of key materials from Europe had not hit its supply chain as yet, although it remained a “key risk” for the winter.

“I must note, unfortunately, that some production lines in Radcliffe have been affected by strike action by a section of the workforce and for several weeks have, to a large extent, not produced.

“This has not affected sales to any significant extent but has lessened our ability to take up some project opportunities in overseas markets that would have required a fast response in manufacturing.

“Energy costs have significantly increased over the past year and the cost of energy to us, as a manufacturer, are very significant.”

To put it in context, Anthony Wild said the energy costs at the Radcliffe site in the four months ended 31 October were more than double the comparative period last year, despite having eight weeks’ less production.

“Whilst support from the government on wholesale prices to business is welcome, our energy costs have yet to hit the cap at which government's support would be payable and even then add on costs to wholesale prices are around an additional 40% charge and are outside the scope of assistance.

“These are very challenging times, especially here in the UK, and we have tasked our teams to monitor costs and minimise cash outflows as high inflation lingers.”

In the short term, and against the current climate, Wild said there had been margin erosion, with the company passing on cost increases as much as possible.

“In addition, commercial flooring demand is robust.

“There are challenges across our global markets but it is still early in our financial year and historically the second half of our financial year is our strongest.”

At 1009 GMT, shares in James Halstead were down 6.62% at 183.5p.

Reporting by Josh White for Sharecast.com.