Luxury interior furnishings play Walker Greenbank (WGB:AIM) is well placed for healthy profit growth in the years ahead.

Growing overseas earnings and the absence of flood distractions which previously hurt the business leave the £143m cap on course for a much improved year.

Performance in the year to January 2017 was hindered by the knock-on effects of December 2015’s flood at Walker’s Standfast & Barracks fabric printing factory.

Yet the outfit behind brands including Sanderson, Morris & Co, Harlequin and Zoffany still grew adjusted pre-tax profit by 16.9% to £10.4m. Encouragingly, the fabric printing factory is now back in full production and the core business is reverting to growth.

Walker’s profit prospects have been materially enhanced by the October acquisition of Clarke & Clarke. This fabrics and wall-coverings business extends Walker’s reach in the US, its second biggest market, and boosts the cash-generative company’s dividend paying capacity.

The new financial year has started positively with brand sales on an improving trend and global licensing income set to benefit from new agreements signed in the US and China.

For the year to January 2018, Edison Investment Research forecasts a jump in normalised pre-tax profit to £14.3m (2017: £10.4m) for earnings of 16.1p (2016: 12.9p). For the year to January 2019, Edison looks for £15.2m pre-tax profit and earnings of 17p.

We’re positive on Walker Greenbank at 203.6p given
the scope for earnings growth underpinned by strong
brands and rapid global licensing income.

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