3rd Feb 2025 09:51
(Alliance News) - Shares in Ultimate Products PLC on Monday fell by a double-digit percentage, after it warned full-year earnings would be lower than expected.
The Manchester, England-based owner of homeware brands including Salter and Beldray now expects adjusted earnings before interest, tax, depreciation and amortisation for the financial year ending July 31 to be between GBP14 million to GBP16 million, below the company compiled market consensus of GBP20.6 million.
In response, shares in Ultimate Products were down 14% to 86.75 pence each in London on Monday morning. Earlier, they set a new 52-week low of 72.12p.
Ultimate Products estimates revenue to be 5.7% lower at GBP79.8 million in the six months that ended January 31 from GBP84.2 million a year prior.
Market conditions in the UK remained subdued due to weaker consumer demand for general merchandise, the company said, although international sales grew by 12% to GBP29.1 million.
A marked fall in the sales of air fryers against a strong comparable weighed on like-for-like performance with revenue down 46% to GBP4.5 million from GBP5.2 million.
Ultimate Products also incurred around GBP2.0 million in extra shipping costs during the first half due to elevated freight rates over the summer. The rise in employers' national insurance charges in the UK is seen costing the business as extra GBP100,000 for the current financial year, with a full-year effect of GBP300,000.
Ultimate Products said the group entered calendar 2025 with the second half order book up an "encouraging" 24% year-on-year. However, since the start of January, "challenging" trading conditions have hurt short-term sentiment.
As a result, it believes that revenue for the financial year will now be broadly flat compared with last year's GBP155.5 million, and below the GBP169.3 million consensus.
Ultimate Products said it intends to continue to invest in the business for growth, whilst returning around 50% of post-tax profits to shareholders through dividends. It aims to maintain the net bank debt/adjusted Ebitda ratio at around 1.0 times.
"As such, the board will carefully consider the level of the dividend in the current year to ensure it aligns with the group's capital allocation policy and supports its focus on both growth and shareholder returns," the firm said.
On Monday, the firm announced a new GBP2 million share buyback, the fourth tranche of its current programme, over a six month period until July 31. It will be run by Shore Capital.
Chief Executive Andrew Gossage said: "As expected, the first quarter of [financial 2025] proved challenging, driven by subdued consumer spending, global shipping disruption, and the fact that we were lapping the tail end of the spike in air fryer sales last year. However, trading conditions in the second quarter showed some improvement, resulting in a more stable top-line performance for the quarter."
Ultimate Products will announce its interim results on March 25.
By Jeremy Cutler, Alliance News reporter
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