Ultimate Products optimistic after 'resilient' year

29th Oct 2024 09:02

(Sharecast News) - Ultimate Products reported a 'resilient' financial performance for the year ended 31 July on Tuesday, in line with market expectations despite challenging conditions.

The London-listed company, which owns homeware brands including Salter and Beldray, recorded a 6.5% decline in total revenue to £155.5m.

It put the decline down to overstocking among supermarket customers and a drop in consumer demand for general merchandise, following high demand in the prior year.

However, international sales rose 7% to £54.3m, driven by growth in European discount markets.

Gross profit fell 5% to £40.5m, with gross margins holding steady at 26%.

Adjusted EBITDA dropped 11% to £18m, while adjusted profit before tax fell 14% to £14.4m.

Statutory profit before tax was down 10% at £14.3m, with statutory earnings per share decreasing 17% to 12.2p.

Despite the declines, the company maintained its dividend at 7.38p per share, supported by strong cash generation of £18.5m and a net bank debt-to-EBITDA ratio of 0.6x.

Operational advancements included a focus on efficiency through automation, boosting gross profit per employee by 4.4%.

Ultimate Products also opened a European showroom in Paris, increasing sales in France by 78% to £12m.

Additionally, the company completed a rebrand of Salter and initiated a similar strategy for Beldray, enhancing consumer engagement and brand identity.

Changes to the leadership team included Andrew Gossage's appointment as chief executive and Christine Adshead as non-executive chair, with two new non-executive directors joining since the financial year ended.

Looking ahead, while weak UK consumer sentiment continued to impact domestic sales, Ultimate Products said it was optimistic about growth opportunities in Europe, with demand from discounters on the continent expected to drive medium-term sales growth.

The company said it remained cautiously optimistic for the current financial year, with easing freight costs and gradual improvement in consumer sentiment expected to support its outlook.

"This continues to be a challenging period for many consumer-facing businesses in the UK, and we are by no means immune from the overall slowdown in spending and weakness in consumer sentiment," said chief executive officer Andrew Gossage.

"However, our growth strategy of building international sales is yielding positive results.

"Our new showroom in Paris is proving to be instrumental in developing our presence throughout the hugely attractive European market, where we see significant opportunity with the discounters that are driving strong European sales growth in the current year."

Gossage said that against that backdrop, the company was "pleased" to have delivered a "resilient" 2024 performance while making operational progress, including increased productivity through the automation of many of its processes and the rebrand of its two principal brands Salter and Beldray.

"Our proposition to retailers today is clear and compelling.

"We offer trusted brands, beautiful products, attractive price points, and outstanding operational capabilities.

"Despite current headwinds, we remain cautiously optimistic for the 2025 financial year as a whole and as confident as ever in our medium-to-long term prospects."

At 0842 GMT, shares in Ultimate Products were down 0.35% at 141.5p.

Reporting by Josh White for Sharecast.com.