Havelock, the specialist in retail and educational fit-out along with point of sale printed marketing, said orders were down 31% in the first 10 months of 2009 on the previous year at £81m, with retail decline no better in the third quarter than in the first half, and the only glimmer of light a marked slowing of the decline in point of sale.
In education, however, orders were 35% up on the same period last year, thanks to the Building Schools for the Future programme.
Group revenue was down 24% at £82.2m.
Havelock is in the process of moving its retail interiors business from group headquarters at Dalgety Bay on to the Kirkcaldy site of education arm ESA Mcintosh, and has admitted there will be “some redundancies” among the 635 staff. It said: “The physical moves and relocation of staff will be completed in January. Considerable challenges have been encountered in the integration of the IT systems, particularly in respect of those elements dealing with production planning and distribution for educational projects, and these have had a knock-on effect on operational performance. These issues are being resolved.”
It said despite the disruption, integration costs should be contained within the £2.7m exceptional full-year charge announced in August.
Havelock also warned that net debt was higher than its seasonal level a year ago due to stronger orders in the more capital-heavy education and integration costs.
It went on: “While there is some encouragement from recent enquiry levels, revenue booked to date is running below forecast and it is unlikely that any improvement in order intake will compensate for this in the period to 31 December … as a consequence, the group’s results for 2009 are likely to fall below expectations.”
The group is “not expecting a return to normal trading conditions in 2010, particularly in the retail sector”, where its biggest customers include Lloyds Banking Group, Marks & Spencer, House of Fraser and Primark, but says site cost savings plus realistic order expectations suggest “an improvement” in trading next year.
Havelock shares, which were at 32p a year ago but climbed to 57p in the summer before plunging on the first profit warning in August, fell 5.5p to 32.5p.
Guy Hewett at house broker Investec said it was “disappointing” to have to cut his forecasts again, “particularly given the reasons are partly internally driven”, and warned that a 50% cut in the dividend might be needed to rebuild interest cover.
Hewett said his 45p price target for the stock was now “under review”.
