Leading UK timber importer and distributor James Latham plc has posted annual operating profits of £3.81m despite difficult market conditions and twice the level of bad debt as a year ago.
A year ago the group recorded pre-tax profits of £7.1m.
Lathams had issued a profits warning in March warning that earnings would fall short of forecasts due to the recession in construction and transport markets, with the group having to increase bad debt provision because of an “unprecedented number of company failures” in the market.
The 2008/09 results show a record number of customers going into liquidation in the December quarter. Bad debts amounted to 0.74% of turnover compared with 0.3% last year.
Lathams said the strong international demand for timber and buoyancy in the UK market experienced in 2007/08 both fell away resulting in falling prices and lower margins.
“Against this background, sterling weakened against the dollar and the euro and increasing prices could not be passed onto the market,” said group chairman Peter Latham.
“Reduced demand seen in the second half of last year continued into April and May. However, there is evidence that margins are gradually improving and while the volume of business is unlikely to increase over the coming six months, margins should improve to more usual levels as supply adjusts to current levels of demand.”
