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The expansion story of FTSE 100 incumbent Howden Joinery Group (LSE: HWDN) has been admirable. It has organically grown market share, efficiency, and returns in years passed by. This helped propel the enterprise to the UK’s premier index final yr.
I already personal shares within the agency, and on paper, I’m up 47%! As a shareholder, I used to be eager to see and dissect yesterday’s half-year outcomes.
I’ve been fascinated by the course of the enterprise just lately, as I hold a detailed eye on all my holdings. I reckon the agency is making a strategic shift at current, and I’m intrigued to see what occurs.
Constructive buying and selling momentum
Let’s begin by breaking down the outcomes launched yesterday for the 26 week interval ending 10 June 2024. As a long-time follower of the enterprise, I’m used to seeing common optimistic updates, and yesterday was no exception.
The primary takeaways for me included a 4.3% rise in income in comparison with the identical interval final yr. Plus, revenue earlier than tax, web money to spice up its steadiness sheet, and the interim dividend all elevated.
The replace did point out larger prices, particularly linked to inflationary pressures, which is comprehensible within the present financial local weather. Plus, the enterprise continues to work on efficiencies and cost-cutting.
Total, administration stated that efficiency was according to full-year expectations.
What’s subsequent?
Personally, I reckon the enterprise is gearing itself up for market domination. Let’s face it, most corporations aspire to be the market-leader in no matter {industry} they function in. Suppose Coca-Cola of the soft-drink world, as a superb instance.
In trade for rising market share, near-term profitability has grow to be much less of a precedence, in my eyes. Don’t get me fallacious, the enterprise continues to be turning a wholesome revenue, and at a superb price. Nonetheless, I feel the enterprise seems to be to be sacrificing fast wins, to set itself up for longer-term acquire.
I feel that is displayed in its latest replace through the point out of cost-cutting to spice up effectivity. Plus, though it possesses an industry-leading margin stage of over 60%, it’s nonetheless at comparable ranges of final yr. That is regardless of a rise in income. Moreover, working revenue remained static.
Let me be clear, I don’t assume it’s a secret what the Howden’s board is doing right here. Nonetheless, it appears to be going about it with none fanfare.
Some actions the agency appears to be taking for progress functions embody new depots and workers. Plus, it continues to take a look at additional efficiencies to be leaner.
Last ideas
Kitchens and joinery aren’t the sexiest merchandise on the market, no less than to not me. It’s maybe not as thrilling as synthetic intelligence (AI) shares, or different tech shares. Nonetheless, there’s loads of proof – such because the agency’s observe document – to recommend that constant returns and progress could possibly be on the playing cards for the longer term.
Plus, the present housing imbalance within the UK may present Howden with an effective way to catapult its ambitions of market dominance.
I’m personally buoyed by what’s occurring, and actually pleased with the capital progress, and dividends I’ve obtained thus far. I’m planning on holding on to my shares for a very long time. If I’m ready to purchase extra after I can, I’ll accomplish that.
