James Latham says enforcement of the EUDR has led to cheap uncertified competing hardwood products being diverted to the UK.
The company made the comment in its latest trading update in which it reported revenue totalling £186.6m for the six months to September 30, 2024. It said the cheaper, uncertified products were especially in the African sapele markets and had resulted in a significant negative effect on the company’s margins on those products.
Jame Latham’s revenue for the period was down 2.3% on the £190.9m reported for the same period last year.
The company says cost prices on both timber and panels have remained stable throughout the first half of the year but there are signs of price weakness in some of its commodity products.
Sales volumes are up 4.1% compared with the same period last year but it is seeing a move in the product mix of its sales towards cheaper alternative products.
“Whilst our panel product side of the business has continued to perform well, the anticipated improvement in our timber business did not occur,” said James Latham chairman Nick Latham.
Operating profit was £11.3m, down £3.2m compared with the £14.5m operating profit for the same period last year.
Profit before tax was £13.6m compared with £16.4m for the same period last year. The tax charge of £3.4m represents an effective rate of 25.3%, reflecting the UK basic rate of corporation tax.
As at 30 September 2024 net assets were £210.4m (2023: £203.8m) and inventory levels were £66.9m.
Lathams says the second half of 2024/25 has started with similar volumes to the previous six-month period to 30 September2024, with similar margins.
“We were expecting the market to show signs of improvement in the second half of this year but so far this has not materialised,” said Nick Latham.
“We have seen considerable challenges in our marketplace, including a significant competitor going into administration and others looking to quickly turn inventories into cash, which has affected short-term margins in some product groups.
“This has created opportunities to increase our market share and enabled us to take on three new brands of melamine and laminate panel products as well as some key specialist salespeople to help promote these new products.”
