Carpet and tiling distributor Headlam saw its profits drop by nearly half in 2009, and said the market was still looking challenging.

The Coleshill-based listed company announced pre-tax profits of £22 million for the year, compared to £40 million the year before. Revenue was down 4.2 per cent, at £534 million.

The firm said there had been an improvement in its fortunes towards the second half of the year, but it was still difficult to say where the market was going.

Headlam chief executive Tony Brewer said: "Following a more positive end to 2009, we are optimistic about a return to growth in 2010. However, market conditions, particularly in the UK, continue to be challenging, which has made normal seasonal trends and predictability difficult to establish.

"Notwithstanding the current uncertainty, we believe the management and structure is in place to enable us to continue out-performing the market and take advantage of any improvement in the economy."

The firm also dropped its dividend to match the profits, paying 11p a share compared to just under 20p the year before.