Fife-based furniture and interior design group Havelock Europa yesterday said it hoped an upturn in the retail sector would help it offset a £2 million loss in the first half of 2013.
The company, which employs more than 400 staff across two sites at Dalgety Bay and Kirkcaldy, said trading in the second half of the year had been significantly stronger and the firm was on track for a positive full-year financial performance.
However, Havelock’s stock fell by more than 15% in early trading on Wednesday after investors baulked at a loss from continuing operations which had widened from £1.18m at the same juncture last year, and a continued recommendation of no shareholder dividend for 2013.
Revenues from continuing operations were also significantly down on the same period in 2012 falling 9% from £37.5m to £34.1m while group net debt doubled from £2.4m at the 2012 year end to £4.8m.
The deficit on the group pension fund halved to £1.8m as a result of good performance in the period of fund investments.
Havelock, which went through a restructuring process last year following the sale of its Showcard Print operation, said the first six months of the year were generally quieter than the second half for its key markets.
The company has a strong presence in the UK educational interiors market and also has long-term relationship in the retail sector with household names such as Primark and Marks & Spencer, with whom it is now a lead supplier for its Far East and Asian arm.
It has also expanded its horizons into the burgeoning student accommodation sector and healthcare sectors, has recently secured a new framework agreement with the Post Office, and won its first business from a major UK supermarket.
The firm has secured contracts relating to the rebranding and fitting out of Lloyds Bank branches under the TSB banner.
Despite the first-half loss, chief executive Eric Prescott was upbeat about the firm’s longer-term prospects.
He said Havelock was also moving on from a number of low-margin projects which it had taken on to help sustain the business through the downturn. We have seen a wash out of big education orders, which is good news in one respect as they were placed at the bottom of the market,” Mr Prescott said.
“It was definitely a strategy for us (low-margin work) as having a factory empty and not working is not a good place.”
Mr Prescott said the company was moving forward, and significant orders were expected to flow from new education projects being signed off across the UK, and the company’s ongoing relationship with major retailers.
“This has been a period of progress and, despite a quiet first half, we are now running again at full capacity and have a robust order book for the second half,” said Mr Prescott.
“Market conditions remain challenging but we believe the work we have undertaken to increase efficiency and provide value added services across our client base puts us in a strong position to deliver continued improvement.”
Chairman David MacLellan said the overall climate remained competitive but insisted Havelock was making headway.
He said: “I am encouraged the group is continuing to make progress towards restoring profitability, and I am confident the work we are undertaking to improve our performance and efficiency will lead to a stronger second-half despite difficult market conditions.”