7th Mar 2014 09:08
LONDON (Alliance News) - AGA Rangemaster Group PLC Friday reported higher operating profits and revenues for 2013 thanks to higher sales of its top-end cookers and a recovery in its bathrooms and kitchens unit, although its pretax profit was hit by higher finance and restructuring costs.
The range cooker maker was also positive about its outlook, saying it expects improved trading and current order intake is more than 6% above the level of a year ago. It expects the order intake to be up strongly by the time it raises prices for its AGA and Rangemaster cookers by more than 3% at the end of March.
The company, which is about to launch a Rangemaster oven specifically for the Chinese market, reported an operating profit of GBP8.2 million for 2013, up from GBP6.5 million in 2012, driven by 2.4% growth in revenues to GBP250.4 million, from GBP244.6 million, and thanks to the operational efficiencies it made during its restructuring program.
It was hit hard by the financial crisis and ensuing economic downturn as it is heavily dependent on a strong housing market for sales of its products. In its statement, the company said the recovery in the UK and US is now entrenched, but still has some way to go.
"The tide turning in the housing market proved pivotal and we will benefit as the number of house moves increase. As revenues start to grow, with capacity available and with new products and a widened targeted customer base, we are confident of good progress in the year," Chief Executive William McGrath said.
"AGA volumes increased significantly, Rangemaster orders were ahead and Fired Earth is building momentum," said McGrath added.
The company's Fired Earth business was particularly hard hit by the downturn, but returned to profitability in 2013 for the first time for several years. The unit, which makes kitchen and bathroom fittings likes sinks and taps, as well as wall and floor coverings, saw revenues rise by over 5% and order intake is accelerating.
Fired Earth made a loss of GBP1.4 million in 2011, and AGA Rangemaster focused on direct sourcing, tight cost control and developed a smaller stores format in the South East of England to turn around the business.
Despite the improved overall operational performance, the company said 2013 pretax profit fell to GBP1.1 million, down from GBP1.7 million the prior year, due to higher restructuring and finance costs, which more than doubled.
It booked non-recurring costs of GBP2.2 million as it shrank sites in Ireland and France, and closed design centres as well as a warehouse in North America. It had booked restructuring costs of GBP1.7 million in 2012.
Finance costs, meanwhile, rose to GBP1.4 million, from GBP0.2 million in 2012, reflecting the higher borrowing costs of the three-year bank facilities put in place at the end of 2012, guarantees for its pension scheme, and interest payable on its euro and dollar hedging loans.
The company isn't currently paying a dividend while it tries to sort out its pension schemes. The schemes are very large compared with the overall size of the business, and the deficit stood at GBP35.8 million at the end of last year.
However, its balance sheet remains strong with total equity of GBP120.7 million, up from GBP119.9 million in 2012, and net cash of GBP5.9 million, up from GBP5.5 million.
In its other operations, AGA Rangemaster said sales continued to slow at furniture maker Grange, with revenues down 8% in the year, while it stayed loss-making despite the cuts to Range's North American business and a move to one site in Saint Symphorien in France.
"Grange has been a drain on resources for some time. The programme to bring the cost base in line with achievable revenues has continued," the company said.
AGA also said that Rayburn and Stanley cast iron cooker/boiler sales continue to struggle, with sales down, although it is predicting a recovery as the housing market continues to pickup.
"Markets remained difficult for the cooker/boiler brands. Rayburn and Stanley rely heavily on refurbishment projects. Overall cast iron cooker volumes fell to 10,000, from 10,300 in 2012, and Stanley sales in Ireland are 30% of pre-recession levels," the company said.
"The tide turning in the housing market proved pivotal and we will benefit as the number of house moves increase. As revenues start to grow, with capacity available and with new products and a widened targeted customer base, we are confident of good progress in the year," said McGrath.
AGA Rangemaster shares were up 2.9% at 178.00 pence Friday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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