James Halstead PLC on Thursday raised its half-year dividend as profit edged higher, despite a decline in revenue.

The flooring manufacturer said profit growth came despite a ‘backdrop of difficult markets’.

In the six months that ended December 31, pretax profit increased 3.9% to £28.5 million from £27.4 million a year prior, even as revenue declined 4.7% to £130.1 million from £136.5 million.

Revenue fell due to ‘restrictions on government spending in several key markets and end customer confidence’, Manchester, England-based firm said.

‘Notwithstanding these adverse conditions, there were margin improvements and overhead reductions,’ it added.

James Halstead continued: ‘The UK represents our largest market and some 43% of total turnover. Sales were at the same level as the comparative period despite there being a notable slowdown in activity regarding our UK commercial flooring activity from July to October following the change of government and concerns in the lead up to the UK autumn budget.

‘Despite this, the backlog of refurbishment and increased capacity of hospitals, schools, prisons and other government buildings is well reported and it can only be delayed not cancelled. Demand for aged care (a core sector for our flooring) is expanding with demand for places outstripping supply with new capacity likely to follow. Our ongoing expectations are for increased sales in the UK.’

The company raised its interim dividend by 10% to 2.75 pence per share from 2.50p.

Executive Chair Mark Halstead said: ‘Against the backdrop of difficult markets, we are pleased to have raised profits underpinned by improved margins and reductions in overheads. We remain confident of the group’s medium-term prospects, despite short-term confidence weakness in Europe, and anticipate another year of progress.’

Shares in the company were up 0.7% to 148.59 pence each in London on Thursday morning.

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