City round-up: Ultimate Products; Speedy; Frenkel Topping
Oldham-based homeware brands group, Ultimate Products, said full year revenues are expected to be flat, and warned of a £300,000 hit from Chancellor Rachel Reeves’s National Insurance hike for employers.
In a trading update for the six months to January 31, 2025, today, the firm also said its second half had begun well, but had tailed off due to weaker consumer demand.
The group said during the six-month trading period, unaudited group revenues decreased 5.7% (£4.8m) to £79.4m (H1 2024: £84.2m).
Market conditions in the UK remained subdued due to weaker consumer demand for general merchandise, while international sales grew by 12% to £29.1m over the same period.
As anticipated, the impact of air fryer comparatives continued to weigh on like-for-like performance, with sales in this category down 46% (£4.5m) to £5.2m.
This effect was most notable in Q1, when group sales were down 9.3% year-on-year. However, trading improved in Q2, with sales down by a more moderate 2.2%.
The group entered the calendar year 2025 with the H2 order book up an encouraging 24% year-on-year, led by strong forward orders from larger customers. However, since the start of January 2025, the current challenging trading conditions faced by some of the group’s retail customers have impacted short term sentiment and has led to a moderating in the pace of new orders.
As a result, the group’s H2 2025 order book is currently up 13% year-on-year, driven by strong forward orders from international customers – up 20% YoY – and a seven per cent increase in the UK. Therefore, the board believes that the group’s full year revenues will now be broadly flat compared with the prior year.
It said the group has maintained its focus on productivity through continuous improvement, which helped to keep operating expenses flat in the period, despite continuing cost pressures. Investment in robotic process automation and AI will also help mitigate upcoming cost impacts, including the increases in employers’ National Insurance contributions (£100k for the current year, with a full-year effect of £300k) as well as the impact of Extended Producer Responsibility (EPR) legislation, expected to have a full year effect of £300-£500k.
The group also incurred c.£2m in additional shipping costs during H1 due to elevated freight rates over the summer.
As a result, adjusted EBITDA for H1 is expected to be in the region of £7m. With H2 expected to see a return to top line growth and freight rates having settled at more normal levels, the board now expects adjusted EBITDA for the full year to be in the range of £14m-£16m.
The board reiterates its capital allocation policy of maintaining the net bank debt/adjusted EBITDA ratio at around 1.0x, with the debt being used to fund the group’s working capital.
The board said it intends to continue to invest in the business for growth, while returning around 50% of post-tax profits to shareholders through dividends.
This will continue to be supplemented by share buy-backs, pursuant to a policy of maintaining net bank debt at a 1.0x adjusted EBITDA ratio.
CEO, Andrew Gossage, said: “As expected, the first quarter of FY25 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 Q2 showed some improvement, resulting in a more stable top line performance for the quarter. Looking ahead, we are cautiously encouraged by both the improved shipping rate environment and by the healthy order book that we have in place for the rest of the year, led by our international business.
“We, therefore, anticipate a stronger performance in H2. While upcoming cost pressures and the ongoing challenges faced by some of our retail customers inevitably create some near term uncertainty, we remain confident in our medium term strategy, particularly given the growing appeal of our brands to shoppers across mainland Europe.”
The group intends to announce its interim financial results on Tuesday, March 25.
Shares in the group fell in early trading this morning. Opening at 81p per share, compared with a 101p close on Friday afternoon, the stock fell to 78p before recovering to 84.37p shortly before 10am.
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Speedy, the Newton-le-Willows-based tools and equipment hire services company, operating across the construction, infrastructure and industrial markets, said it has achieved promising year on year growth in the quarter to December 31, 2024, in a trading update for the 10 months to January 31, 2025, today.
However, it warns that it expects lower than anticipated profitability for the full year.
This led to a 29% slump in its share price in early trading this morning.
It said hire revenue for December was five per cent ahead on the prior year. The positive momentum going into the final quarter has, however, been negatively impacted by the widely reported economic downturn, it warned.
This has resulted in a slower post December shutdown recovery across the majority of its customer base. Further, the delay in CP7 rail works has also had an impact on trading in the final quarter but remains a significant opportunity for the group into FY2026, it added.
During the third quarter Speedy continued to develop its Trade & Retail proposition, securing new major trading relationships, although it is taking longer to achieve the expected levels of hire revenue which it now anticipates achieving during first quarter FY2026.
The group has completed the mobilisation of its contract with Amey, which is trading in line with expectations.
The joint venture in Kazakhstan has experienced a significant downturn in performance due to the early shutdown of major contracts. Speedy anticipates this having an ongoing impact into FY2026, however, there are significant opportunities which give confidence for future growth, it said.
Net Debt at January 31, 2025, is expected to be c.£123m (January 2024: £113m). This is the result of previously reported investment in Capex during the first half in support of new contract wins.
Working capital continues to be a key focus area and consistent with prior years Speedy anticipates strong cash inflows in the last two months of the financial year. The increased level of net debt will result in a higher than expected interest charge for FY2025.
Looking ahead, Speedy said it remains committed to the delivery of its Velocity strategy providing benefits for the long term. It is focused on what it can control, and said it will continue to manage its cost base and balance its investment decisions in response to the current economic climate.
It said the group has a promising pipeline of growth opportunities with new and existing customers, and should benefit from increased government spending on infrastructure projects.
Nevertheless, with the challenging start to its final quarter and ongoing macroeconomic uncertainty, the board expects lower than anticipated profitability for the full year.
Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “Speedy Hire crashed 28% on a profit warning linked to a weak start to 2025 and a delay in rail works. In good times, equipment companies benefit from rising rental income and they reinvest money back into the business to expand their fleet. In bad times, they suffer weaker rental fees and typically stop buying more equipment. Speedy Hire needs to decide whether market issues are short-term setbacks or the start of something more serious.”
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Frenkel Topping Charity
AIM listed Frenkel Topping which provides specialist financial and professional services advice to accident victims, expects to deliver revenue growth of 14% at £37.4m and adjusted EBITDA of £8.0m for the year ending 31 December 2024, in line with the prior financial year.
In a trading update issued to the stock market this morning, the Manchester headquartered business said the results are expected to be in line with management expectations and the business are performing in line with management’s expectations.
It said momentum in growing Funds Under Management (FUM) also continued as expected in the second half. Total growth in FUM of £225m over the year represents overall growth of 17% which is an improvement on the previous financial year which was 12%.
Its recent acquisition, Ascencia, has continued to perform strongly and, for the first time our assets on a discretionary mandate have surpassed the £1bn mark.
North West Law, which it acquired in April 2024, has performed in line with management’s expectations and 2025 will see deeper integration with other Cost Law firms, which is expected to improve collaboration and cross-referrals.
Further, the company said that the outlook for the current financial year “has seen continued positive momentum”.
However, the anticipated impact of National Insurance (NI) and National Minimum Wage (NMW) rises is expected to be c.£360k in FY2025 and c.£500k thereafter on an annualised basis. These increases are expected to be largely absorbed within the current financial year and will “moderately impact” the current year by c.£200K.
