LONDON (AFX) - Timber merchant James Latham PLC has turned in a strong rise in underlying annual profits thanks to higher sales and said the new year has begun well.

In the year ended March 31, Latham made a pretax profit excluding disposals of 5.4 mln stg compared to 3.8 mln a year earlier, while total sales grew 6.1 pct to 114.9 mln stg.

The group said its core Lathams business, the panel products and timber distributor, achieved a 3 pct increase in turnover but after a small decline in gross margin percentage the net profit was lower than last year.

Nevill Long Ltd, the ceiling, drylining and partitioning distributor, grew sales by 20 pct, resulting in a record profit of almost 2.0 mln stg.

However, Latham's said Nevill Long's profits have been volatile, and it took the opportunity to sell the business in March for a profit of 6.2 mln stg.

Detailing its current trading, Latham said April and May taken together have been 'satisfactory', while 'the indications are that June will follow suit.'

Availability and replacement prices are 'hardening' for a number of its products, Latham added, which 'normally has a beneficial affect on sales and margins.'

Excluding a special dividend, the group will pay a total dividend of 6.0 pence per shares for the year, up from 5.2p last year.

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