This is a curious sector, or at least the way it is defined is curious. It is made up of house builders like Berkeley Group, online sellers of household goods, and an array of companies, including the giant, Reckitt Benckiser, which operate in quite different fields.
There are a lot of large companies in this sector. In this report, I only look at companies valued over £100 million.

This is meant as a starter, a quick overview. Do more research before investing.

A.O. World

Is an online retail group specialising in electrical goods.

The share prices recently rose to a five year high, latest results saw its first annual profit. There has been no financial update since Covid.

Berkeley Group

Shares were at an all‐time high earlier this year, and have increased 20‐ fold since the stock market debut in 1988. To put that in context, the average house prices has increased from around £150,000 in 1988 to £248,000 today. So, shares in this house builder have outstripped property prices many times over.

Furthermore, these days Berkeley is a good dividend payer. As an interesting comparison, consider the profits from investing in buy‐to‐let in a property built by Berkeley, including rental yield, with the profits from growth in the company's share prices and dividend. Sure, buy‐to‐let offers the potential upside of leverage, but even so, that is a massively superior return from shares in Berkeley to buying one of its properties. And yet, the profits have fallen over the last five years. Meaning the P/E ratio increased.

Bellway

Although the share price for this housebuilder has slipped over the last five years, its growth over the long term (since 1988) has been phenomenal. It is a good dividend payer with a formidable balance sheet.

Churchill China

A surprisingly low P/E ratio considering profit growth in the last five years. The Company makes and sells tableware, and proudly boasts it has been around 220 years. Latest results saw a Covid related fall in profits and dividends. The company stated: "Our widespread of business has enabled us to benefit from faster recovery rates in different countries. Our differentiated product range and fulfilment capabilities continue to deliver competitive advantage in what remain repeat orientated markets. This market position continues to be supported by a well‐invested business, a strong financial position and an experienced management team."

Cairn Homes

Cairn Homes is a high‐quality home builder.

Share prices performance has been disappointing, but on the other hand, profit and revenue growth has been impressive; indeed, yield is not bad, and the balance sheet looks strong, verging on mighty. Results were, not surprisingly, down in the latest six‐month period. The company stated: "Cairn's uniquely strong financial position and balance sheet allows us to focus on rescaling our business as evidenced by 15 construction sites reopening on 18 May 2020. The Company had a gross cash position of c. €155.0 million and net debt of c. €187.0 million as at 30 June 2020. Our balance sheet is underpinned by c. €955.0 million in inventories, consisting of c. €695.0 million of land held for development and c. €260.0 million of construction work in progress.”

Crest Nicholson

The company is a residential house builder. So much about Crest Nicholson, from the point of view of investors, is a disappointment. Shares have taken a massive knock this year, share price performance since 2013 has been poor, profits have shrunk over five years, yet the dividend remains attractive, and the balance sheet is very impressive. Indeed, net assets are worth more than the market cap. In the latest half‐year (to the end of April) profits fell sharply, (adjusted gross profit down 64.2 per cent) but that is understandable. Peter Truscott, Chief Executive of Crest Nicholson, said: "Before lockdown the business was performing well and trading in line with our expectations. We were continuing to recognise further improvements to margin in our current developments and short‐term land portfolio. We were also delighted to be awarded five‐star status by the HBF customer satisfaction scheme in March this year.

"However, we cannot ignore the risks that COVID‐19 presents to the U.K. housing market even if we cannot predict with certainty what the impact of those risks will be. Therefore, we have adapted our strategy by deferring the planned opening of an additional division and targeting further reductions in overheads. Taking decisive action now will ensure Crest Nicholson is able to flourish in whatever market conditions may emerge in the future, including if the market quickly returns to growth."

Headlam

Europe's leading distributor of floorcoverings. In the six months to the end of June, revenues fell 30.6 per cent, and the company posted a small underlying operating loss of £0.5 million. The Chief Executive said: "The company's performance was significantly impacted in the Period by the COVID‐ 19 pandemic and associated governmental guidance and restrictions.

"...against the backdrop of COVID‐19, the Company has continued with the planning and accelerated implementation of some of the projects forming part of its Operational Improvement Programme. The Programme has been designed to make the business more customer‐focused and operationally efficient, and reflects the Company's continued focus on the longer‐term. A number of the projects
under the Programme will also support anticipated ongoing changes to customer ordering and interaction preferences as a result of the impact of COVID‐19."

Indivior

At first glance, the profits and revenue trajectory look worrisome. It describes itself as a global pharmaceutical company working to change patients' lives by developing medicines to treat addiction and serious mental illnesses. It's a worthy cause, but why it is listed in Household goods and construction is a puzzle. In Q2 of this year, revenue fell from $215 million the year before to $150 million. Net income dropped from $75 million to $$18 million. Mark Crossley, CEO of Indivior PLC, said: "Considering this backdrop, our first‐half results were solid. We maintained a good cash buffer, and we did so while helping to ensure the safety and wellbeing of our employees. I am particularly encouraged by the performance of SUBLOCADE® (buprenorphine extended‐release) Injection through this Period, as Q2 net revenue of $29m was unchanged versus Q1's level. Furthermore, we came to a satisfactory agreement with the DOJ (subject to judicial approval) that allows us to focus our resources on pursuing our Vision and patient‐focused growth strategy. In the short term, we continue to be impacted by the industry‐wide reduction in new patient starts in the U.S. However, looking to the future, I am confident that our novel depot technologies, SUBLOCADE® and PERSERIS® (risperidone) extended‐release injection, have the power to transform lives and to drive a new era of growth."

McBride

"Leading European manufacturer and supplier of Private Label and Contract Manufactured products for the domestic Household and professional cleaning/hygiene markets."

• In the year to the end of June, revenue fell five per cent and profit before tax dropped 32.7 per cent. With the results, the Company stated: Today we are announcing our new aim of growing annual revenues to €1 billion in the next five years. This ambition is supported by a number of key outputs from our initial review:
  The European household market (including branded products) totals £14 billion with expected growth of per cent per annum over the next five years
• Whilst private label share has fallen in the past three years, it is expected to grow in the next five years
• Identified and targeted opportunities for profitable growth will allow McBride to grow beyond average market trends
• A divisional approach will best promote the focus and accountability required to deliver both individual division and portfolio performance improvement
• Cost reduction and efficiency improvements will be a key aspect in the improved profitability
• Certain functions will remain centralised in order to maximise synergy benefits."

Reckitt Benckiser

Reckitt Benckiser is the world's largest producer of household goods and cleaning products, owning brands such as Dettol, Clearasil, Vanish, Harpic and Airwick. It is also involved in health and personal care brands such as Nurofen, Strepsils, Gaviscon, Durex and Scholl.
It disappoints me to see such an established company with current assets worth less than current liabilities.

In the first half of 2020, net revenue increased 11.9 per cent. Group adjusted operating profit was £1,696m compared with £1,475m last year.
Laxman Narasimhan, Chief Executive Officer, said: "We have the largest portfolio of surface disinfectant brands, including Dettol, Lysol and Sagrotan. Our largest brands are trusted by our consumers, as evident in their performance. Our supply chain has withstood the challenge of unprecedented demand, demonstrating agility and flexibility, albeit with additional costs and investments. Our Hygiene and base Health businesses have both performed well, with strong volume growth in challenging circumstances. At the same time, our infant and child nutrition business has delivered important operational and executional improvements, although the focus remains on delivering revenue growth through innovation and navigating headwinds such as Hong Kong. Overall, our leadership in e‐commerce has helped deliver very strong sales growth of over 60 per cent, with eCommerce sales now estimated to account for 12 per cent1 of first‐half group net revenue."

Redrow

It describes itself as the U.K.'s premium home builder. There has been no financial update since February. However, looking at the fundamentals, it ticks many boxes –– share price hit an all‐time high this year, good profit growth over five years, good dividend payer, strong balance sheets. As with other housebuilders, a lot depends on the U.K.'s performance post‐Covid.

FW Thorpe

Designers, manufacturers and suppliers of professional lighting systems. There have been no financial updates since March. One of the few companies in this sector to see the current share price within spitting distance of the all‐time high. Nice revenue and profit growth over five years, strong balance sheet.

Victoria PLC

"A leading designer, manufacturer and distributor of innovative flooring products. The Group has operations in the U.K., Europe and Australia."

In April and May, revenue was 35 and 55 per cent respectively of pre‐Covid estimate, but in June it exceeded the estimate by two percentage points. The company said: "2020 was the seventh consecutive record year for Victoria as the Group's competitive strength continued to grow and strategic objectives were achieved."

Revenue has certainly seen good growth, but in the last three years, the company made a loss.

The Company stated: "The Group refinanced its bank debt with long‐dated senior secured notes ('bonds'). These bonds are not due before July 2024 and carry no maintenance financial covenants, placing the Group in a strong financial position."

Vistry Group

The Company is a housebuilder and combines Bovis Homes, Linden Homes, and the newly named Vistry Partnerships (formerly Galliford Try Partnerships).

In its latest six months, group revenue was up 28 per cent, but it made an operating loss meaning profits/loss was down 113 per cent.
Greg Fitzgerald, Chief Executive, said: "We moved quickly to integrate Linden Homes and Vistry Partnerships at the start of the year. It has been a successful process bringing together the best from each business, with the benefits from the combination expected to be ahead of our initial target. We have achieved this whilst maintaining our focus on delivering excellent service to our customers.

"Housebuilding's first‐half performance was significantly impacted by the lockdown and resultant site closures. Vistry Partnerships demonstrated its market resilience and robust revenue model and led the Group to an early successful return to site, with production levels across the Group now back at near‐normal levels.

"We have seen positive sales trends since early May, with consumer interest higher than at any time in recent years. Our sales rate in the second half to date is running 20% ahead of last year at 0.73, and pricing remains robust. The Group is well‐positioned to capitalise on the opportunities available in the second half and into 2021 when we expect to deliver a step‐up in completions and profitability, a reduction in gearing and a return to dividend payments."

All prices are approximate figures taken from 8 September 2020 from Yahoo Finance.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees