14th Feb 2023 14:39
(Alliance News) - UP Global Sourcing Holdings on Tuesday said it expected its performance in the financial year 2023 to July 31 to be in line with market expectations, boosted by continued high demand for energy efficient products.
UP Global Sourcing shares were 7.1% lower at 154.76 pence each in London on Tuesday afternoon.
UP Global Sourcing is a Manchester-based owner of homeware brands, including Salter and Beldray. UP stands for Ultimate Products. The Salter brand includes sandwich toasters and air fryers while Beldray is a cleaning brand which offers vacuum cleaners and steam irons.
Shore Capital research analysts Darren Shirley and Clive Black estimate that UP Global will increase its revenue and adjusted pretax profit in the next two financial years. In financial 2023, they expect revenue to grow to GBP169.1 million and in financial 2024 to GBP179.2 million, compared to GBP154.2 million in financial 2022. Adjusted pretax profit is set to increase to GBP17.0 million in financial 2023 and GBP18.4 million in 2024, up from GBP15.8 million in financial 2022. The analysts noted "a more visible and sustainable online sales channel," generating about GBP4 million per month, as well as an easing of constraints on retailer forward ordering.
Shore Capital added: "We expect gross margins to benefit from the material easing of freight costs in recent months." They forecast a financial 2023 dividend yield of 4.4% and a free cash flow yield of around 8%.
On Tuesday, UP Global reported that in the six months that ended January 31, revenue increased 2.2% to GBP87.6 million from GBP85.7 million a year previous. "Consumer demand for energy efficient and money saving products has remained buoyant across all channels throughout the period, UP Global said.
"Encouragingly, the level of general retailer overstocking experienced during 2022 which, along with the challenging macroeconomic environment, caused retailer customers to be cautious in the size of their forward orders, is now reducing in the UK and more normal patterns of order placing have recommenced," UP Global said.
The company explained online channels were the main driver of growth, supported by the continued normalisation of global supply chains.
Chief Executive Simon Showman says: "Looking ahead, we expect that the current softness in global shipping pricing, as well as the partial recovery in Sterling, will provide additional relief against the ongoing inflationary backdrop."
Shore Capital said regarding its outlook on UP Global: "In demonstrably tough times for retailers and consumer alike, UP's robust H1 23 delivery is further strong evidence to us of the group's resilience and the high quality of its evolving business model, sales activities and relationships. Such relationships are based upon excellent service levels and its high-quality stable of proprietary brands portfolio, which include Salter, Beldray, Progress, Kleeneze, and Petra in Germany. UP also has a multi-year rolling license for the Russell Hobbs brand, (non-electrical kitchen and laundry)."
The company will release its full results for the half-year to January 31 on March 29.
By Tom Budszus, Alliance News reporter
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