James Latham records rise in sales, profits and volumes during Covid-19 year

Despite the pandemic disruption to business, Lathams recorded annual revenue of £250.2m, up 1.3% on the previous year, while pre-tax profits rose to £18.6m, up £2.9m on the previous year.

Like-for-like volumes increased by 6.6% and the cost price of the company’s products rose significantly in the second half of the year and are on average 7.3% higher than at the start of the financial year.

Net assets have increased to £121.8m (2020: £104.3m). Inventory levels have increased to £48.3m from £44.3m last year. This is partly to do with increased inventory in the new timber pack business, LDT Ireland, based in Dublin, but mainly due to increases in prices for its products.

Despite the challenges of the pandemic, bad debts have been minimal. Cash and cash equivalents of £28.6m (2020: £17m) remain strong with good cash flows from operating activities.

“The strong demand seen towards the end of this financial year, has continued into the new financial year, with margins also improving,” said Nick Latham, James Latham’s chairman.

“Global demand for timber products is very strong, being driven primarily by North America, but also from the construction sector worldwide.”

Mr Latham warned that manufacturers currently have an allocation system, limiting opportunities to grow volumes further.

He cited the struggle by global timber product manufacturers to cope with Covid-19 (especially in South America), labour shortages, rising costs and a shortage of raw materials.

“The majority of the market sectors that we supply are busy, but there are still a few sectors, such as hospitality, aerospace and shopfitting that are still trading at pre-Covid-19 levels.

]“The outlook is difficult to predict, but the current challenging supply situation looks set to continue through 2021, but visibility beyond that is much more uncertain, but we know that the market will change at some point.”

The company expects margins to better than normal for the next few months, then returning to normal.

The company will continue to look at acquisition opportunities and investment in warehouses, citing expanding the 24/5 operating model introduced at the Fareham, Hemel and Leicester depots.

Capacity at Yate and Hemel will be expanded by 25%, while new machinery will be purchased for the Dresser Mouldings business.