Omega International is on course to achieve its growth objective, set out in late 2005, to double in size by 2010.

The company, which designs and makes branded kitchens (Sheraton, Omega and Chippendale) sold to independent retailers, cooked up a 25% pre-tax profits improvement to £3.8m for the half to 26 June on a 21% rise in sales to £16.3m.

Operating margins continued to trek higher to 23% (22%) with Omega coping well with input cost hikes and unruffled by rising interest rates. ‘We are in a resilient market that’s slightly insulated from rate rises,’ explained chief executive Francis Galvin. ‘Our kitchens appeal to the more mature buyer and we’ve not yet seen any sign of slowdown.’ Omega continues to invest in its dealer network and to take an increasing share of a £1.06bn market of which it only speaks for 3%. ‘We are all about taking market share from weaker competitors and we do it very well,’ Galvin added.

Following yet another strong period for cash generation, dividends increased by 29% to 0.9p. Even after £2.85m of capital spending to complete a major extension of Omega’s Doncaster production facilities, £1m of net cash sat in the half-time coffers.

For the year, house broker Cenkos forecasts a rise in pre-tax profits to £8m (£6.4m) from sales of £32.5m. Earnings are forecast to grow by 25% to 20.1p and a 2.5p dividend has been pencilled in. We believe that the forward price-to-earnings (p/e) ratio of 14.3 looks miserly given growth prospects and Omega’s results track record and knack of beating forecasts. The shares, first recommended by GCI at 159p, remain terrific value. Strong buy.

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