|Heywood Williams Group
||EPS - Basic
||Market Cap (m)
|Construction & Materials
Real-Time news about Heywood Wms. (London Stock Exchange): 0 recent articles
|robbiedapict: So what is the prognosis? Will the company survive, adn share price recover? Or can we kiss good bye to our money?|
|cockneyrebel: Very little 'ramp' in the share price with no posts for 5 months imo :-)
|barnetpeter: Heywood Williams goes from bad to worse
Second half to be worse than the first, final dividend may be withdrawn
300 jobs to go, write down of excess stock and bad debt
Supply chain difficulties in Plastic division mean year-end banking covenants may be breached
Centrallock project written-off, DIY window and door business terminated, composite door factory to be closed, e-procurement service to be written-off
More agony today for shareholders in building materials and plastic products supplier Heywood Williams. The shares have crashed 38 per cent to 51p after the company issued its fourth profit warning in 12 months. The final dividend will be cut or dropped (the shares were offering a yield of 11 per cent) and, to top it all off, the company is in discussions with its banks regarding its covenants. Chairman Hamish Bryce has resigned, following chief executive Ian Stewart who quit in August.
Heywood says that results for the second half will be no better than the £1.7m pre-tax loss reported in the first half. That's because of a weak UK door, window and conservatory market and low returns from the US PVC pipe market. On top of that, several of the company's own initiatives, including a DIY window and door service and an e-procurement service, are failing to perform and there are supply chain problems in the plastic systems business. The group will take a £25m charge this year for stock write downs, impairment charges and the closure of underperforming operations.
This morning's share price reaction is understandable given the dismal trading news, probably dividend cut and admission so many subsidiaries are worthless or need costly restructuring. However, there may be an element of "kitchen-sinking" here: getting all of the bad news out of the way so that a new chief executive can come in with a clean slate. But that's not a reason to dive into the shares: the company is in discussions with its banks, so there's scope for more bad news, and even if this is a bad as it gets the recovery will be long and hard. Avoid.|
|maywillow: hvs,once the ex divi is out of the way and theres less hype,Is there a risk that the share price will fall back through the 120p support?|
|penpont: I'd been considering Heywood as a recovery and income play too but I must admit I just felt it was too risky, so I chose Avon Rubber instead.
Just for the interest of holders/prospective buyers (and because I haven't seen it anywhere else other than HS Premium service), here's an item that appeared there on 3 Sep, and I'll also paste up the only recent forecasts that are available from HS:
INTERVIEW Heywood Williams former boss in line for 450,000 stg pay-out
ERN DIV MGT ITW/GBR/CON/
--- by Malcolm Locke ---
LONDON (AFX) - Ian Stuart, the former chief executive of PVC doors and
windows maker Heywood Williams PLC, could be in line for a potential pay-out of
around 450,000 stg if the terms of his contract are honoured by the company.
Stuart, who resigned at the end of July after the group issued another
profits warning, was paid a basic salary of 302,000 stg, according to the 2002
annual report and accounts. He was on an 18-month contract.
The group today stressed that no compensation package had yet been agreed
with Stuart, but shareholders are likely to be angered at any sizeable pay-off
award in the light of the company's recent performance. A series of profit
alerts have led to savage downgrades by analysts over the past year while the
company's share price has halved over the past 12 months.
Today, the shares firmed up 4-1/2 pence to 142 at 10.30 am as a more upbeat
message on prospects offset a pretax loss of 1.7 mln stg in the first six months of 2003. In the corresponding profit last year, the group made 10 mln stg.
Despite the fall in half-time earnings to just 1.3 pence a share, the group
is holding the interim dividend at 5.25 pence and re-affirmed its intention to
maintain the total 2003 payout at 15 pence -- which will be largely covered from the proceeds of recent sales of the Coldseal and Creation Group of companies.
"Shareholders have taken a lot of pain and the interim results were very
disappointing, but we're taking remedial action to ensure we unlock growth and
the profit potential of the company," chairman and acting chief executive Hamish Bryce told AFX News in a telephone interview this morning.
"We're aiming to get some stability back into the business. We have leading
market positions for our products in both the US and the UK. We just need to
improve our execution skills to deliver improved results," he added.
Analysts currently anticipate profits of about 3 mln stg for the full year
to Dec 2003, which would give earnings of about 2.5 pence a share. "The
half-time loss of 1.7 mln stg was still a shocker, but there is considerable
recovery potential, although it is taking longer than expected," said Teather &
Greenwood analyst David Taylor.
The group's fall in profitability and share price have prompted renewed talk
of a bid or management buy-out, but Bryce today dismissed any moves to take the
group private. "There have been no talks regarding any precipitative action," he said.
Forecasts for 03/04 - eps in bold:
TD Waterhouse 02-09-03 UNDP 2.40 2.00 9.00 7.20 6.20 9.00
Arbuthnot Securities 12-08-03 HOLD 2.00 2.60 15.00 9.50 8.20 15.00|
|doubleorquits: Thanks for the Sunday Telegraph tip, penpont. it's good to have the profile of these raised and I thought that might happen after the results. The thing about "a number of bidders already said to be circling" is not something I take with much more than a pinch of salt. That is journalistic generalisation -rumour breeding rumour without being specific. When they know they tend to tell and until they state specifics I shall continue to be a little cynical.
However, it is a reasonable rumour - the share price is bombed out and the dividend yield demonstrates that it is grossly under-valued when it gets its act together. On a dividend yield of 6% it would still be regarded as an income stock - even high yield - and that implies the share price could double from here even with a static dividend.
Nevertheless a nice mention today ahead of the ex-div and a definite recovery and bid candidate - just a candidate IMO for now, though but most willing to be wrong.|
|stely: Agreed Penpont & WirralOwl. Not only is management blaming global market difficulties in their sectors for poor performance (not evidenced in any other public home improvement company - witness Kingfisher or Home Depot/Lowes in the US) but also they are being less than straightforward in their stated accounts. The annual report announces a "seasonally low, year-end debt level" of £35 million. I suspect that true on-going debt levels are probably in the £50-£60 million range (given end-of-year massaging of the numbers and continuing poor operating performance). This compares with a market capitalisation of around £90 million (at around 115p per share).
Even excluding the £10 million exceptional hit last year, EBIT was less than £15 million. If we use a "reasonable" valuation of (say) six times EBIT we get to a £90 million enterprise value minus the debt of (say) £60 million. On that basis, this firm should be capitalised at £30 million (or around 40p per share). This assumes that performance does not continue to deteriorate and also ignores the propensity for frequent "exceptional" losses.
If they continue to have poor performance this year then it is hard to see how management will be able to continue paying their 14.5p annual dividend (which costs them £11.5 million in cash) without further increasing the debt. At some point their bank is going to block further debt increases. This dividend is the only thing holding up the share price. They may be able to pull some one-off rabbits out of a hat this year to pay the dividend, but it cannot be sustainable in the longer-term without massive operating performance imrpovement. There is no evidence to suggest that the current management team are capable of improving operating performance...their record suggests the reverse.
I suspect that talk of a takeover is spurious. No public company would want this firm and a private equity house would not buy it without extensive due diligence...which the Board is unlikely to provide (as the process would likely uncover plenty of warts). The best hope for an upturn in the shareprice is acitivist shareholders forcing a change in management or the sale of some of the parts with the resulting cash being returned to shareholders. I suspect such pressures will not really begin to manifest until the shares drop well below a pound and I am shorter at least until that happens.|
|doble: You're right - this is an undervalued stock paying a good dividend.The recent share price rises hopefully indicate that 'there is no smoke without fire'and could well 'flesh-out' any prospective bidders. Next week's AGM should be interesting !|
Heywood Williams share price data is direct from the London Stock Exchange