UPDATE 2-Galiform H1 profit down; warns of slower trading

(Adds analyst comment)

By Marc Roca

LONDON, July 23 (Reuters) - UK kitchen maker Galiform GFRM.L warned that economic uncertainty could affect trading in the second half of the year as it posted a drop in first-half profit on Wednesday, sending its shares down over 5 percent.

The company, which supplies kitchens and appliances to builders under the Howden Joinery banner, said it was not expecting the economic environment to improve in the short term.

Shares in the company, which have fallen almost 70 percent in the last year on fears that consumers would slash spending on expensive home improvements as house prices start to fall, were down 5.6 percent at 38.25 pence by 1018 GMT.

Dresdner Kleinwort analysts reacted with a 9 percent cut in full-year profit estimates.

"Trading since May has slowed - by 4 to 5 percent -, which suggests a more conservative forecast view is warranted," they said in a note. "The macro is likely to weigh on earnings and sentiment, but Howden will remain a very robust business given its flexibility, depots maturing and ongoing roll-out opportunities."

Profit before tax and exceptional items for the 24 weeks to June 14 was down to 20.1 million pounds ($40 million), compared with 24.8 million a year earlier, while sales at Howden Joinery increased by 9.6 percent.

STILL NO INTERIM DIVIDEND

Galiform said that due to tough market conditions it would continue not to pay an interim dividend, but expected to pay a final dividend unless conditions deteriorated "markedly".

The group has not paid an interim dividend since before changing its name from MFI Furniture Group in 2006, following the disposal of its loss-making furniture retail unit MFI to private equity firm Merchant Equity Partners for one pound.

Given the economic backdrop, it will also take a more cautious approach to its expansion programme and will open only five depots in the second half, compared with 15 in the first and up to 60 last year.

The group said it benefits from significant exposure to the tenanted housing sector, both public and private, which is subject to different economic drivers than the owner-occupied sector, and very limited exposure to the new housing market. (Reporting by Marc Roca, editing by Will Waterman, Paul Bolding)