James Latham warns of sterling weakness pressuring margins in coming months

Panel and timber distributor James Latham warns that sterling's weakness, whilst increasing prices, could put pressure on margins in coming months.

The company on Thursday reported a first-half pre-tax profit of £7.7m, from a year-ago profit of £6.3m. Revenue improved to £100.3m, from £96.2m. Interim dividend rose to 4.5p, from 4p.

"In trading conditions which have been different for the various markets that we serve, group revenue has grown by £4.1m as a result of higher prices of imported goods resulting from the fall in the value of sterling with small gains from sales volumes and product mix," it said.

"Trading margins for the six months to 30 September 2016 are higher than for the previous year," it added. Overheads had been well controlled, and bad debts remained lower than expected.

"We continue to take advantage of cash settlement discounts from suppliers where this represents a good return," James Latham said.

Commenting on present and future trading, the company said management information showed growing revenue for October and the first half of November, at slightly lower margins.

"The weakness of sterling, whilst increasing prices, could put pressure on margins in the coming months," James Latham said in its results statement.

"Market conditions continue to be difficult in some areas, while improving in others. We are in a good position with our wide range of customers and we are trading comfortably in line with market expectations."

The company said it was progressing plans to relocate its two oldest depots.

At about 14:24 GMT, shares in AIM-quoted James Latham were up 3.4% to 685p.