Ultimate Products celebrates £110m revenue, but sends warning
Ultimate Products, the Oldham consumer goods group listed on the LSE in a £105m float earlier this year, is predicting spectacular revenue growth to £110m, but has sounded a warning over future trading conditions over the economic effect of wages running behind inflation.
A trading update for the full year ended on July 31 says the turnover will be up 39% from £79m.
It success has been driven by three main factors – growth in sales to discounters in the UK and in Europe (up 64.6% to £63.8m); increased sales from the main UK supermarkets (up 95.0% to £10.3m); and the emergence of online platforms as a new revenue for the business (up 63.6% to £4.6m).
The board says it anticipates reporting underlying EBITDA and underlying pre-tax profit performances above market expectations, mainly driven by higher revenues.
Net debt is anticipated to be lower than previously expected, due mainly to a one-off corporation tax credit of £2.1m received in FY17 relating to the IPO in March, as well as the current customer mix.
A particular highlight of the group’s branded product portfolio during the period has been the performance of Progress, the cookware and kitchen electrical brand, which is now listed with several retailers including, as of January 2018, a major UK supermarket.
The refurbishment of Ultimate Products’ new 240,000sq ft warehouse at Heron Mill in Oldham has been completed to plan and is now the group’s main distribution facility.
However, despite the optimism, the company sounded a warning in its trading outlook. A statement said: “The overall trading environment for general merchandise has become tougher, with wage inflation running behind general inflation.
“Consumers’ discretionary spend is under pressure and confidence is therefore lower than it has been for some time, which is inevitably being reflected in purchasing behaviour.
“For retailers, this has also coincided with cost price increases in the wake of last year’s sterling devaluation.
“As a result, retailers are generally exercising caution with regard to their non-food buying for autumn/winter 2017. This is manifesting itself in a reluctance to commit to purchasing too far forward, with retailers instead placing orders later or buying from stock.”
