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UK's Howden Joinery sees encouraging start to 2024 after annual profit fall

(Reuters) - British kitchens and joinery products supplier Howden Joinery said on Thursday it saw "encouraging" revenue growth in the current financial year after it posted a 19% drop in 2023 profit, partly dented by its investments into the business.

Fortunes of companies such as Howdens are firmly tied to the health of the housing repair, maintenance and improvement (RMI) segment, which has been under some pressure as Britons continue to curb spending in the wake of broader economic woes.

"While we are cautious about the macro-economic and geo-political environment, given the encouraging start to the year and the agility of our business model, the board is confident in the outlook for 2024," said CEO Andrew Livingston.

Its UK depot revenue, which accounts for about 97% of the total turnover, fell slightly by 0.7% to 2.24 billion pounds ($2.84 billion) in 2023, in line with expectations.

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The company, which sells its products to trade customers through its network of depots, said it planned to open 30 new depots in its main market, the UK, taking the total number of depots in the country to about 870.

The FTSE 100 <.FTSE> company said pre-tax profit for the 53 weeks to Dec. 30 was 327.6 million pounds, almost in line with company-compiled analysts' average estimates of 332 million pounds.

Shares in the company were trading about 6% higher at 820.6 pence as at 0832 GMT.

The annual pre-tax profit figure was weighed down by a 53-million-pound investment as Howdens expands and revamps its depot network, and improves manufacturing capabilities.

Also, the company had a one-off additional week of costs of 17 million pounds in the 2023 financial year.

"Despite near-term weakness in UK RMI activity, we think earnings have troughed in 2023 and believe Howden will continue to take market share before a recovery in RMI activity," analysts at RBC Capital Markets wrote in a note.

($1 = 0.7899 pounds)

(This story has been corrected to read FTSE 100, and not FTSE 250, in paragraph 6)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich)