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[March 2006]
Portmeirion Group 2005 Annual Results
Highlights of the Portmeirion Group figures for the year ended 31 December 2005, just announced, are:• Annual sales of £27.552 million, 2.7% above the previous year when measured in the same US dollar exchange rate, but level with last year following the sterling/dollar exchange rate movement.
• 2005 pre-tax operating profit of £1.351 million compared to a loss of £0.420 million (restated) in 2004.
• Final proposed dividend maintained at 9.95p.
• 2005 earnings per share 7.11p, compared to a loss of 11.20p in 2004.
Exceptional items for the year amounted to £0.319 million compared with £1.193 million in the previous year. Therefore, the total profit for the year, before taxation, was £1.032 million compared with a loss of £1.613 million (restated) the previous year.
The Board recommended a final dividend of 9.95p bringing the total to 13.25p for the year, unchanged from 2004. The dividend will be paid, subject to shareholders' approval, on 26 May 2006, to shareholders on the register at the close of business on 28 April 2006. Portmeirion said it was nearing its short-term goal of ensuring that the dividend is covered by earnings.
Chairman Arthur Ralley said: "I am pleased to report that, following the major re-organisation of the Company's manufacturing plants, a creditable profit improvement of some £2.6 million was achieved. This was also after absorbing approximately £0.5 million in costs due to the further fall, at our hedged rates, in the value of the US dollar to sterling. Since sales in the US account for over a third of the total, the Company hedges exchange rate risk by selling dollars forward. In 2004 the hedged rate was $1.63, and in 2005 $1.78. The Group is largely hedged at $1.82 for 2006, so additional exchange losses should be minimal for the current year.
"The 2005 full year contribution of £0.35 million to the Group's now closed defined benefit pension scheme has been reviewed, following the scheme's actuarial valuation during 2005. As a result the contribution will remain at the same level for 2006.
"Exceptional operating costs in 2005 consisted of £0.284 million following the consolidation of the two manufacturing sites in Stoke-on-Trent to one. The Board also decided to take an impairment charge of the Group's investment in Furlong Mills, a company supplying raw material to the ceramic industry. This impairment is a non-cash write-down of £0.273 million. These exceptional costs were offset by an exceptional gain of £0.238 million following the sale of the vacated manufacturing site.
"The 2.7% improvement in sales on a constant exchange rate basis was achieved with an exceptional export performance, which more than offset a disappointing UK market result.
"Sales in the US in dollars increased by an impressive 11%, to $18.275 million, representing 37% of total sales in sterling. This was achieved with improved sales of our established classic tableware patterns, plus the addition of lower priced Portmeirion Studio ranges, sourced from overseas. The team at our US subsidiary is to be congratulated on a fine performance in improving market share.
"Sales to South Korea increased by a remarkable 41% to £4.670 million, following a major expansion in the number of retail outlets stocking the Company's classic ranges. There is still opportunity for growth with new product ranges to be introduced this year. Apart from Japan, where we changed from selling through a wholly-owned subsidiary to a local distributor, all our other major export markets showed healthy sales increases leading to a total Group export sales increase of 18% on a constant exchange rate basis.
Sales in the UK were 19% below the previous year. Although the performance was affected to some extent by reduced consumer spending, and fewer tourists, I believe this disappointing sales trend will be corrected with the introduction of much needed new product ranges. No fewer than five new ranges are being delivered to our retail customers in the second quarter of this year, which should lead to the essential improvement in sales.
"The result of this sales performance and exceptional gains on property disposal has increased the Group's cash balance to £6.3 million at the end of the year. There will be a further cash gain following the sale of our secondary warehousing site when the new warehouse is completed. This will ensure that the Company maintains a strong balance sheet while still investing £3.0 million in capital expenditure for mechanising and equipping the new warehouse."
Speaking about current trading and prospects, Arthur Ralley said: " I expect 2006 to be another challenging year, with consumer spending on a tight rein. Sales so far this year are below the previous year, but broadly in line with expectations. As I have reported, I expect the sales trend to improve as our new ranges come to market in the second quarter of this year.
"Our consumers now require new casual dining products every season, and we will maintain the momentum of new product introductions. This, together with constant improvement in efficiency and productivity, will, I believe, result in continuing improvement in the Group's performance."
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ENDS