James Latham plc has reported a strong increase in interim profits and sales and predicts that its results for the year will “meet expectations”, despite deteriorating trading conditions.

In the six months to the end of September, Latham achieved sales of £60.26 m, a 10.8% increase on the same period in 2004. Pre-tax profits were 35% ahead at £2.76m.

The profit figure included £367,500 in interest receivable on deferred payment for the company’s site in Clapton, east London.

According to Group chairman Roger Latham, in trading terms the first half was actually more difficult for the Lathams Ltd timber and panel distribution business than the previous year. Sales were 7.3% up, but gross margin percentage was down and this, combined with higher costs, hit net profit.

Currently this business is “experiencing a reduction in demand from some customers” and “increasing competition for available business”.

&#8220We believe that trading will meet market expectations for the full year”

Roger Latham, James Latham plc chairman

The Group’s Nevill Long ceiling system, drylining and partioning operation has had a better time. It reports an increase in market share and improved margins in the first half and “continues its run of strong sales at good margins”.

Looking forward, Mr Latham said trading in the second half was expected to be “less buoyant” “However, we believe that trading will meet market expectations for the full year”.

Latham also announced that it is using part of the proceeds from the sale of the Clapton site to pay a special dividend to ordinary shareholders. It is also making a £9m payment into its final salary pension scheme which is £10.5m in deficit. This will comprise £3m from the deferred payment for Clapton, bank loans of £5.5m and the balance from “company resources”.