Manufacturer’s share price plummets 25%

Portmeirion’s share price crashed 25% yesterday after the pottery manufacturer revealed it expected its decade-long run of rising results will end.

The Stoke-on-Trent group, which makes and sells brands including Wax Lyrical and Royal Worcester, said pre-tax profits for 2019 “will be significantly below market expectations”.

Group sales for the first four months of the year are down 10% against the same period last year. Although it expects to narrow the gap in the rest of the year, it is unlikely to extend its 10-year run of record revenues and profits.

Investors reacted badly to the news, with a sell-off wiping around £30m off Portmeirion’s market value.

At the close, Portmeirion’s share were trading down 25% at 920p.

The group’s share price has had a rollercoaster 18 months. It was trading at 923p at the start of 2018, peaked at 1320p in June and fell back to 905p in December.

Positive updates then pushed its share price upwards again, climbing to a year-high close of 1215p last night. But this morning’s profit warning has wiped out those gains, returning the shares back to 905p.

Until today, Portmeirion appeared to be avoiding some of the difficulties that had affected the sector in the West Midlands and resulted in more than 400 jobs being lost at Dudson and Wedgwood.

Nine weeks ago it revealed annual figures which showed a tenth consecutive year of growth, resulting in record revenues and profits.

In late March Portmeirion still expected trading to be in line with expectations, and chairman Dick Steele said “we look forward into 2019 with confidence”.

But despite good sales growth in its two largest markets – the UK is up 5% and the US up 8% against the prior period last year – sales, particularly for Korea, have been lower than expected.

The group said: “We have been working with our Korean distributor on new product development during 2019 which we see as critical to protect and grow this market for the long term.

“However this new product development, by nature, will take time to bring to market and optimise for manufacturing efficiency.”

The company added that it does not expect that this will lead to a change in its expectations for dividend payments in the current year.

“We believe our long term strategy is the right one and are pleased with the progress we are making in other areas to protect and grow our brand portfolio.”

Peter Smedley, research director at finnCap Group Plc, said: “Portmeirion’s profit warning is likely to unsettle investors as the negative development in Korea is in stark contrast from their position in 2018, where the country had been highlighted as having ‘stabilised and now growing again’. Investors will be quick to draw comparisons to Portmeirion’s torrid 2016, which was driven by declines in key markets, including Korea.

“Despite investor weariness we predict that Portmeirion will bounce back. Investors will be reassured by the success of the business’s diversification strategy in managing unexpected decline in 2016, as well as the continuation of their five-pronged growth strategy imperative.”