Heiton build on housing growth with sales set to reach a record €423m

HEITON GROUP are expected to report record sales of close to €423m when it unveils its results for the year-ending April 30, 2002, on Thursday.

The stellar Irish Stock Market performer has seen shares soar by over 50% since January. It retains an accumulate recommendation from NCB Stockbrokers, who have placed a €3.60 price target on the share, which yesterday opened at €3.25, well ahead of its year low of €2.05 on January 10.

Yesterday, Heitons announced the completion of a €4.2m refurbishment of its 20 Heiton Buckley builders merchants outlets.

Commenting on the latest developments, Heiton Buckley managing director Eddie Kelly said: "We are now the largest builders merchant in Ireland and this extensive refurbishment programme will enable us to satisfy the needs of a more diverse range of customers.

NCB analyst John Sheehan, commenting on his expectations of Thursday's results, said that after an interim advance of 20.4%, he anticipates a rise of 18% in EPS, pre-goodwill amortisation and exceptionals, to €42.3 cent (April 2003: €35.8 cent).

Mr Sheehan believes Heiton will have restored earnings growth through the delivery of cost savings of €2.9m, following last year's rationalisation.

The integration of acquisitions Cork Builders Providers and Wright Window Systems (combined cost: €33.8m) along with the tapping of continued strong demand in Irish house-building markets and the repair, maintenance and improvement (RMI) sector will also push earnings.

"Residential construction in Ireland grew strongly in 2002. This growth has continued into the first half of 2003 and demand looks positive for the remainder of the year. RMI spending also remained strong and fine weather was a plus in early 2003. We expect a positive near-term outlook," said Mr Sheehan.

NCB said sales at Atlantic Homecare DIY chain fell by 9%, as poor weather in summer 2002 and greater competition impacted.

"We expect the full-year figure to be appreciably better, with like-for-like sales either in line or slightly ahead of the prior year. Fine weather in early 2003 benefited second-half trading," said Mr Sheehan.

In Britain, Heiton's results for the past year are expected to be poor.

"Heiton's British operations are expected to have recorded a further decline in the past year. The planned exit from certain businesses will have reduced turnover," said Mr Sheehan.

The NCB analyst believes Heiton's balance sheet remains sound, with expected net debt of €78m at 30 April.

"The outlook is expected to be positive entering the new financial year. Irish residential and RMI activity in Ireland is set to remain strong at least for the remainder of 2003," he said.