The London stock market has at least one beneficiary of the summer’s heavy rain: Galiform, the FTSE 250 kitchen maker that emerged from the old MFI Furniture following the sale of its retail division last year.

It seems that the wet weather from May to August has prompted jobbing builders to defer the exterior work thay might otherwise have done in favour of inside tasks - such as fitting kitchens.

That is the best explanation for the impressive 7.7 per cent rise in like-for-like sales reported by Howden Joinery, the chain of trade-only depots that comprises Galiform’s core business. Given the expectation that five successive rate rises would have hurt demand for home improvements, that number - which implies a 10 per cent gain in July and August - took the City by surprise. Of course, if work scheduled for autumn has simply been pulled forward to the summer, the company faces a slower second half. On that front, Matthew Ingle, chief executive, sagely sounded caution.

But yesterday’s numbers contained much else to impress. First-half pretax profits came in at an above-forecast £24.8 million, helped by a bigger than expected reduction in losses at its manufacturing business from £25 million to £13 million.

Elsewhere, Galiform’s pension deficit, which once stood at more than £300 million, has fallen to £79 million, while the December termination of its supply agreement with MFI – now in private equity hands - and estimated second-half restructuring costs of £25 million suggests that debt will have fallen to a manageable £45 million by the end of the year. The lightening of its balance sheet means that Galiform could return to the dividend list with a nominal payout at its finals in March.

But the bigger draw is the strength of the Howden model. Time-poor consumers and more sophisticated kitchen ranges mean the flat-pack kitchen is a thing of the past. Howden benefits from its strong relationships with local builders, who are familiar with its ranges - priced from £1,000 to £10,000 – and find them straightforward to install. That relationship should strengthen as Howden rolls out more depots - it has opened 100 in the past two years alone - to reach 442 by December. Given that Travis Perkins, its closest peer, has 850 outlets in the UK, there appears plenty of scope for growth.

With the residual financial drag from the MFI separation coming to an end, Galiform could also be a target for the likes of Kingfisher, Home Retail or Travis, all of which are expanding their trade operations.

A sharp downturn in consumer spending is a genuine concern but Galiform’s strong forecast profit growth - its 17 times 2007 earnings multiple falls to 10 times by 2009 – and attractiveness to rivals should provide a floor at 138p. Hold.

Galliford Try

This FTSE 250 constituent is the sort of housebuilding to general construction combine - with a dash of PFI work - that was declared a dinosaur a decade ago. In years when housebuilders had to do little to sell vast numbers of new homes, Galliford struggled and its margins looked pedestrian. Facing a choice of break-up or beef-up, it pursued the latter, embarking on an acquisition trail that brought in Morrison Construction and, more recently, the housebuilders Chartdale and Linden Homes.

Yesterday’s full-year figures appeared to confirm the strength of that strategy. Underlying pretax profits were up 63 per cent to £53 million on revenue up 65 per cent to £1.4 billion. The overall order book has risen to £2.1 billion, with £1.1 billion for infrastructure, where more than two thirds comes from a growing market for public sector projects. These range from £500 million of work on Britain’s flood defences, a £150 million site clean-up project for the 2012 Olympics and construction of Europe’s largest windfarm. In housing, Galliford completed on 1,526 sales, up 45 per cent from last year, boosted only in part by acquisitions. Margins are up at 14 per cent, despite a bigger proportion of social housing, where margins are tighter. The shares, off 2¾p at 152¼p, have fallen from 188½p this year amid wider housing fears. But its focus on affordable homes and regeneration positions Galliford well relative to current Government policy, making a current-year earnings multiple of less than 11 look reasonable value. Buy.

Umbro

Steve Makin, chief executive of Umbro, has more reason than most to cheer on Steve McClaren’s team against Israel tomorrow and Russia next week.

The replica kit maker’s UK sales plunged 55 per cent in the first six months of this year, with the bulk of this down to the drop-off in demand for England tops. There is no major international football tournament this year and the national team’s chances of taking part in the next one are fading with every foot injury. Umbro always fares badly in nontournament years, so the weakness of 2007 interim pretax profits – which fell 43 per cent to £10 million – against last year’s World Cup was much as expected.

What did surprise was the company’s admission that it expects sales of the new England away shirt – to be launched in February – to be 20 per cent lower than forecast because of an overhang of stock from a poor summer. That implies a shortfall to forecast 2008 profits of £8 million, or 27 per cent – the sort of drop the City had previously expected if England did not qualify for Euro 2008.

Not all was gloom. Sales in the US are up 155 per cent, with Russia up 50 per cent and China ahead 22 per cent. Umbro also continues to win kit deals for leading football teams across Europe. It recently extended its agreement with Lyons, the French champions, until 2013. Yesterday’s 13 per cent slide to 120¾p means Umbro now trades at 11.6 times 2008 earnings. That still looks too dear unless Michael Owen starts hitting the back of the net. Avoid.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive