UK building products firm Heywood Williams on 6 May 2009 warned of further pain in 2009 against a background of “unprecedented market deterioration” but said it had a plan to deal with the current eco…
UK building products firm Heywood Williams on 6 May 2009 warned of further pain in 2009 against a background of “unprecedented market deterioration” but said it had a plan to deal with the current economic conditions. The Halifax-based group will tell shareholders at its Annual General Meeting that the market conditions facing the group in 2009 are even more difficult than the “very tough” conditions experienced in 2008, with sales in the 1Q down 27% on the 1Q 2008. In an interim management statement from January to May 2009, the group said it has traded in line with market expectations during the 1Q of the year, with net borrowings at the end of March lower than both expectations and 2008 It added that cash management continues to be its main focus. Working capital was reduced by GBP 1 million in the 1Q of 2009 compared to a GBP 6 million increase in the comparable period in 2008. Heywood, which supplies products ranging from windows to door handles, makes about 80% of its sales from the home improvement and new build markets of Europe and North America. The company said new build and home improvement activities in Europe were considerably lower compared to the same period in 2008 due to the continuing combined effects of consumers being more cautious and the considerable reduction in the availability of finance. In the UK, it is estimated that the overall hardware market was down over 25% in the 1Q of 2009 compared to 2008, which in turn was down over 15% compared to 2007. The Irish building products market has contracted by over 40% and the market in Scandinavia and the Baltics has fallen over 50% in the 1Q of 2009. In a statement the firm said: “Against this unprecedented market deterioration, our management teams across the UK and European businesses have worked hard to outperform the market and minimise the impact of the downturn”. “Market share has increased, including winning new business with a number of major accounts. Significant cost reductions have been implemented to align the cost base with the tougher market conditions we are now facing with headcount reduced by a further 11% in the 1Q”. The firm said that both the manufactured housing and recreational vehicle markets in North America have declined sharply since the financial crisis began in October 2008. In the 1Q of 2009 the manufactured housing market is estimated to be down over 40% and the recreational vehicle market down over 60%. The team at LaSalle Bristol have reduced headcount by a further 13% and reduced inventories significantly, without impacting customer service. Heywood said: “As previously outlined, residential building products markets around the world had a very tough 2008 and conditions, as anticipated, are worse in 2009”.