Shopfitting and interiors group Havelock Europa has stayed in the red in the first six months of the year, amid “subdued” demand from the retail and financial services sectors which it expects to continue for the rest of the year.
However, the Fife-based company said it expects to soon return to profitability as it continues work to “simplify, standardise and declutter”.
The company posted reduced pre-tax losses from continuing operations of £1.8 million for the six months to 30 June, down from £1.9m in the same period last year. Total revenue from continuing operations fell to £28.9m, down from £30.5m, and net finance costs dropped to £182,000 from £200,000.
Chief executive David Ritchie, who succeeded Eric Prescott on 5 May said that although the short-term trading outlook is “challenging,” he believes the business reorganisation plan announced at the start of this month “will enable the business to deliver sustainable profits in the future”.
This plan includes reducing staffing levels by about 10 per cent, equivalent to approximately, and selling Teacherboards to Sundeala Ltd for a total consideration of £1.4m, which helps mark its departure from the educational supplies business.
The business also highlighted that it introduced a new management team in May, and has moved its head office close to its Kirkcaldy factory, which took place “on time and in budget”.
Additionally the firm said its customer base, which includes Alliance Boots and Marks & Spencer, “significantly” grew during the half-year period, “continuing the strategy of diversifying within each of the sectors”. It also said it is developing its presence in the premium office fit-out market.
Having expanded into Europe and Asia, the company also said its international retail sales are “on target to achieve expected growth”.
Group net debt, this reached £3.1m at 30 June, compared to £2.6m one year previously. Its pension deficit fell to £2.4m from £3.7m, but this “remains volatile,” the company said.
Looking ahead, chairman David MacLellan said: “Progress on the business reorganisation is being made and we expect to have the major changes implemented by the end of December.
“This will ensure that we enter 2016 with a stable, focused, more efficient business that is better placed to take advantage of the many opportunities that we are identifying.”
The firm warned when announcing the job cuts that its annual earnings would be “materially” below previous expectations.