- Group Sales Growth: 4.1% increase to GBP 2.4 billion, driven by UK market share gains and international expansion.
- Gross Margin Expansion: 110 basis points improvement, with EBIT margin at 14.7% despite cost pressures.
- Profitability & Returns: Profit before tax up 5.1% to GBP 345 million; 8% EPS growth and GBP 100 million share buyback announced.
- Depot Modernization: 45 depots to be revamped in 2026, targeting 77% UK depots in updated format by year-end.
- Balance Sheet Strength: GBP 345 million cash reserves, GBP 3.8 billion operating cash flow over 10 years, and GBP 1.5 billion shareholder returns.
Operational Highlights
Howden's operational performance was characterized by the continued rollout of its strategic initiatives, including the evolution of its depot network, improvement in range and supply management, development of digital capabilities, and expansion of international operations. The company opened new depots, with a total of 970 depots trading, including 891 in the U.K. The updated depot format has strengthened the company's competitive proposition, with around 68% of all depots opened in the old format having been revamped by the end of 2025.
Valuation and Outlook
Using the current valuation metrics, we can assess what's priced in for Howden. The company's P/E Ratio is 20.71, indicating a relatively high valuation compared to its earnings growth. The EV/EBITDA ratio is 10.85, suggesting a reasonable valuation relative to its earnings before interest, tax, depreciation, and amortization. The Dividend Yield is 2.21%, providing a relatively stable return for shareholders. Analysts estimate revenue growth at 5.3% for next year, which may be achievable given the company's strategic initiatives and market position. As Andrew Livingston noted, "We are confident of delivering growth ahead of our markets while generating strong cash flow and attractive returns for shareholders."
Conclusion on Financial Health
Howden's financial health remains robust, with a strong balance sheet and cash generation. The company generated GBP 3.8 billion in operating cash flows in the last 10 years and has a net debt to EBITDA ratio of 0.74, indicating a manageable level of debt. The return on equity (ROE) is 23.05%, demonstrating the company's ability to generate strong returns for shareholders. Overall, Howden's financial performance and operational highlights suggest a well-positioned company with a strong outlook.