5th Mar 2019 11:34
LONDON (Alliance News) - Shares in beauty products maker Swallowfield PLC fell sharply Tuesday after its interim profit sank on higher costs, despite revenue and the dividend both receiving a boost.
Shares in Swallowfield were 12% lower at 172.00 pence on Tuesday.
For the six months ended January 12, pretax profit narrowed nearly three-quarters to GBP728,000 from GBP2.8 million the year prior. This was despite revenue rising 3.5% to GBP41.4 million from GBP40.0 million the year before.
Profit performance was hurt by a sharp rise in costs as well as exceptional charges. Commercial & administrative costs rose to GBP5.8 million from GBP5.0 million the year prior. Meanwhile, exceptional costs related to redundancies and one-off pension charges rose to GBP869,000 from GBP25,000 the year before.
Cost of sales also grew ahead of revenue, up 6.9% to GBP34.2 million from GBP32.0 million the year prior.
"This first half year has been impacted by significant material cost inflation, as previously signalled in the Manufacturing segment of our business," Swallowfields Chair Brendan Hynes said. "Our Brands business continues to perform well against very strong comparatives."
Swallowfield proposed a 2.15 pence per share interim dividend, up 7.5% from 2.00p the year prior.
"Actions have been taken to improve the margin performance of our Manufacturing business in the second half of the year and beyond," Hynes continued. "Swallowfield therefore remains well positioned to regain its positive growth momentum."
Swallowfield explained it forecast full year results will be "broadly" in line with market expectations. This is after it expects a "materially improved" performance in the second half of the year despite the "challenges faced in the wider environment".