LONDON (ShareCast) - (Sharecast News) - Lords Group reported a slight dip in revenue amidst challenging market conditions in its unaudited interim results on Tuesday.
The AIM-traded firm said that for the six months ended 30 June, it recorded group revenue of £214.2m, down from £222.6m in the same period last year.

Like-for-like revenue dropped 6.1%, which it attributed to economic headwinds and market disruptions in the plumbing and heating division due to the deferral of the Clean Heat Market Mechanism (CHMM).

Despite the revenue decline, the group's gross margin remained steady compared to the prior period and even improved over the full 2023 financial year, driven by a focus on customer service.

In response to the economic pressures, Lords said it had implemented cost-saving measures expected to deliver £2.6m in annual savings by the 2025 period.

The company said its adjusted EBITDA fell 16.6%, down to £12.6m from £15.1m in the first half 2023, reflecting the impact of the softer market.

However, the plumbing and heating division saw a major boost from the UK's ongoing commitment to sustainable living, with sales of air source heat pumps surging by 492%.

Lords also announced an interim dividend of 0.32p per share, down from 0.67p a year earlier, aligning with its earnings per share performance.

The company said it was confident in its ability to capitalise on future market recovery, positioning itself for operational growth as conditions improved.

"Trading conditions have remained challenging throughout the first half of 2024 with like-for-like revenue 6.1% lower," said chief executive officer Shanker Patel.

"The introduction and subsequent deferral of the Clean Heat Market Mechanism (CHMM) disrupted the plumbing and heating market, and we experienced a 15% like-for-like revenue reduction in the first quarter, but a stronger second quarter resulted in a resilient first half with divisional revenue 3.2% down overall.

"In this challenging market, management has remained focussed on optimising capital allocation and operating efficiency, with actions taken on costs expected to deliver annualised overhead savings of £2.6m in the 2025 financial year."

Patel said the group welcomed the new government's support for the sector and the recent interest rate reduction, which was widely expected to lead to improved conditions for the UK construction market.

"The group's focus on operational efficiency and working capital management will ensure that we are well positioned for any market recovery.

"In the medium term, the group is well placed in a highly fragmented and essential repair, maintenance and improvement (RMI) market, to grow the group's market share organically and through selective, valued-added acquisitions which will become more attractive as the market returns."

Lords Group was encouraged by the growth in renewable product sales, Shanker Patel added, believing it could be an additional near-term growth lever.

"Whilst the outlook for the construction sector is beginning to improve, the board is not expecting any change to trading conditions in the second half of 2024 and, recognising the important autumn season ahead, particularly in plumbing and heating, expect that adjusted EBITDA will be in line with management expectations."

At 1130 BST, shares in Lords Group Trading were down 5.51% at 36.85p.

Reporting by Josh White for Sharecast.com.

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