Markets are twitchy, analysts are nervous and economic conditions are uncertain. But Aim-traded James Halstead is strong, stable and optimistic about the future. Investors can also take comfort from the industrial floor-maker’s past.
A family business turned public company, James Halstead has delivered 42 years of uninterrupted dividend growth – a record on the stock market and one that the firm fully intends to continue.
The shares are £3.72 and should increase, as James Halstead expands into new markets and consolidates its hold in the UK and elsewhere. Investors will also benefit from the steady flow of dividend payments, with 13.9p pencilled in for the current financial year and 14.3p expected in 2020.
On trend: Halstead’s customers include fashion label Alexander McQueen
James Halstead started out as a textiles business. Now it focuses almost entirely on industrial, vinyl flooring. Once, these types of floors were considered hard-wearing but ugly. Today, they range in design from plain and functional to decorative and deluxe.
Halstead’s clients reflect this range. Public sector customers include schools, hospitals, prisons and Government offices. Within the private sector, however, top fashion labels such as Chanel and Alexander McQueen use Halstead flooring, as well as Narita airport in Tokyo, El Corte Ingles department stores in Spain, Wetherspoon pubs over here and numerous hotels and restaurants.
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The company also produces specialist goods, such as tiles formulated to make dementia sufferers feel safe and anti-static flooring used in munitions factories and data server centres.
At one time, James Halstead used overseas factories for most of its orders. Now, 70 per cent of the group’s manufacturing is done in the UK at Radcliffe, near Manchester and Thornaby on Tees in North Yorkshire.
Even though most of the flooring is made here, Halstead has a thriving export business. The group generates almost 70 per cent of sales from overseas, selling to 155 countries around the world, in particular France, Germany, Holland and Commonwealth countries, including Australia, New Zealand and South Africa. There is a long-standing presence in Hong Kong as well, which provided Halstead with an early foothold in China.
Founded in 1915 by James Halstead, the company is still run by a member of the family today, Mark Halstead, who has worked in the business for 30 years and spent the past 16 as chief executive.
Finance director Gordon Oliver has also worked for the group for three decades, including an almost 20-year stint in his current role.
Such experience comes in handy. Halstead and Oliver have steered the company through tough patches and periods of rapid growth, always focusing on retaining a strong balance sheet, paying dividends and delivering a good service to customers.
The approach has served James Halstead well over the years and is likely to continue doing so. Having built a strong market share in the UK and selected other countries, the group is now keen to expand in South America, India and the rest of Asia. Progress to date is encouraging and increased sales are likely to follow.
The business is also working on its environmental footprint, using recycled vinyl to reduce plastic consumption and boost efficiency.
Analysts expect sales to rise just over 2 per cent to £255million in the year to June 2019, with profits up nearly 9 per cent at £50.8million and further growth predicated for 2020.
MIDAS VERDICT: Industrial flooring has come a long way since James Halstead first set up shop. Today, businesses are keen to use vinyl that is well-priced, easy to use and can even look good. Halstead is a beneficiary of the trend. The company is sure and steady, rather than fast and furious. But its track record speaks volumes. At £3.72, the shares are a buy.