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[August 2006]
Portmeirion Group Half-Year Results Announced
Portmeirion Group saw a big increase in pre-tax profits for the first half compared with the same period last year.On announcing the financial results for Portmeirion Group PLC for the six months to 30 June 2006, A Ralley, Chairman, made the following comments: "I am pleased to report that the Group produced a pre-tax profit of £787,000, before exceptional redundancy costs of £277,000. The pre-tax profit before exceptional items, therefore, was a commendable 224% improvement on the comparable profit in the first half of 2005. Total Group turnover declined by 5.7% in the first half, compared to the first half of 2005. However, there was a significant increase of 3 percentage points in manufacturing gross margin and this, together with higher gross profit margins on imported products, more than offset the effect of the lower turnover. However, the Board recognises that Group sales must increase in order to sustain profit improvement.
"Although total Group turnover was lower, export turnover increased by 2.7%, following a healthy increase of 18% in 2005. Turnover in the US was particularly good, being 9% ahead of 2005, and accounting for 40% of total Group turnover.
"However, the sound export performance was undermined by a disappointing decline of 22% in sales in the UK. I had anticipated an improvement in UK sales in the second quarter, with the introduction of several new product ranges. In the event, these new ranges, all produced in the Far East, became available only at the end of June, and so did not provide the uplift expected. These ranges are now in distribution to our retail customers and are selling well, and I therefore anticipate the improvement in sales from the new products in the second half of the year. Our association with Sophie Conran has proved to be particularly successful. Initial demand for the range, jointly designed with her exclusively for Portmeirion, has far exceeded expectations and now extends beyond the UK to our markets in the US, Canada, Europe and Australia. The Group will substantially increase promotional activity with its well-known classic ranges, in order to further underpin a sales recovery in the UK."
On manufacturing and outsourcing, Mr Ralley said: "The results clearly demonstrate the profitability improvements to be achieved from implementation of the Group’s strategy. The consolidation of UK manufacturing of our classic ranges has produced a significant improvement in gross profit margin. The Group has reduced manufacturing costs, while maintaining overall capacity, and I am sure that further improvements in productivity will ensue. At the same time, new contemporary designs that have been outsourced to the Far East have been produced to the Group’s required quality standards, and are now selling well at more competitive prices. I am confident that the Group’s stated aim of outsourcing 50% of product will result in incremental sales in the medium and long term, and reduce the risk inherent with manufacturing almost solely in the UK."
He also confirmed that the new 64,000 sq.ft. warehouse building is under construction and on schedule. Some £3 million in capital expenditure will be needed to mechanise and fit out the building, to be operational by Spring 2007. With the group’s strong balance sheet this is expected to be completed without any borrowing.
On the question of Chairmanship of the group, Mr Ralley took the opportunity to announce that on reaching his 65th year in April 2007 he will retire from the Board. Consideration of a successor is underway and an announcement will be made in due course, he confirmed.
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ENDS