Profits up by 48.5% at consumer goods firm

Oldham firm Ultimate Products revealed strong first half figures this morning, with both revenues and pre-tax profits making impressive progress.

The firm, which designs and develops a range of value-based consumer goods, said turnover in the six months to January 31 was ahead by 36% to £65.8m driven by growth across all four of the group’s channels: UK and European discounters’ revenue was up 34.6%; UK supermarkets revenue was up 32.1%; online revenue was up 85.2%; and international retailers’ revenue was up 173%.

Profit before tax jumped by 48.5% to £5.9m.

The group said Europe continues to be its largest contributor of international growth, reflecting the investment in an office and showroom in Cologne which opened in April 2018.

An interim dividend of 1.16p per share is recommended, which is an increase of 39.8%.

Current trading for full year of 2019 is comfortably in line with expectations, the group added.

On Brexit, the board said it continues to assess the implications of a ‘no deal’ Brexit and the potential impact on volumes and margins if it led to a material devaluation in Sterling.

However, over the longer term, the board says it is confident in the adaptability and resilience of the group’s business model, as evidenced by the strong recovery in trading in the first half of financial year 2019, despite the background of a challenging UK consumer and retail market.

Chief executive Simon Showman said today: “We are delighted with the strong recovery in trading that the business has delivered in the first half of the year.

“These results should be taken as a clear sign of the adaptability and resilience of our business model, especially when viewed against the ongoing difficult trading conditions within the UK general merchandise market.

“The performance has been driven by consistent growth across each of our four strategic channels, and we are particularly pleased with the way in which our international and online businesses are developing.”

He added: “Looking ahead, market conditions in the UK are likely to remain challenging for the foreseeable future.

“However, current trading is comfortably in line with expectations and we remain confident that a relentless focus on our tried and tested strategy will continue to deliver sustainable growth.”

Shares in the firm had risen by 9.86% by 10am this morning, to 78p, compared with a high of 81p.

Hannah Crowe, a broker with Equity Development, raised her full year expectations on the strength of today’s results, saying: “If our assessment is correct, UPGS’ fair value is 100p per share.”

Research analysts at Shore Capital, Clive Black and Darren Shirley, said: “We view UP’s valuations as both undemanding and attractive.”