Fife interiors firm Havelock Europa has claimed further progress in its recovery strategy after cutting more than 100 jobs last year.
In the six months to June the Kirkcaldy-based company’s revenue fell by 12% from a year previously to £25.4m despite the expected downturn in corporate sector activity and the weaker retail sector.
It attributed the better than expected performance to strong public sector demand.
The operating loss before tax was more than halved from £1.6m to £700,000, which the firm said reflected the benefits accruing from business decisions made in late 2015.
Investing in a new business structure and in an Enterprise Resource Planning project led to a small increase in net debt from £3.1m to £3.6m.
Havelock had been in serious trouble after losing a contract tender with Lloyds Banking Group,its largest single customer, which carried revenue streams worth £14m.
Drastic action was taken including cutting a fifth of its 530-strong workforce in an exercise to “right-size” the business.
In its latest half year report, Havelock said anticipated overhead reductions had been achieved, with further savings identified and realised.
The drive to simplify and standardise the business has resulted in strong margin improvement against the first half of 2015.
Higher public sector volumes had offset reduced volumes in the corporate sector and retail and lifestyle demand.
Havelock developed new retail and lifestyle customers in the period, growing a significant pipeline of opportunities.
It had also expanded its design capability to help develop the new customer pipeline and the launch of a London design office to further increase coverage.
Other highlights included international sales delivering over 15% of turnover.
Havelock said the business reorganisation is on track, with main cost savings delivered. the focus now on developing deeper relationships with existing and new customers.
The UK’s vote to leave the European Union and subsequent political developments had increased the market uncertainty across the firm’s customer base.
Pricing pressure has increased post the Brexit vote. Activity within the Retail and Lifestyle Sector remains subdued.
Overall, trading remains in line with market expectations.
Chief executive David Ritchie said: “Largely due to the actions we took last year to right size the business and standardise business processes, the business has benefited from strong margin improvement.
“This has led to a significant reduction in the first half loss compared to last year.
“In addition, strong demand from the public sector has helped to offset weakness in retail and the expected downturn in the corporate sector.”
