Aga blames tough year for profit fall

ICONIC cooker manufacturer Aga Rangemaster has seen a major drop in profits in what it describes as “an extremely tough year” for its core product.

The Solihull-based company saw pre-tax profits for last year fall from £14.4m in 2008 to £0.5m, with basic earnings per share dropping from 14.4p to just 2.5p.

Revenue fell from £279.4m in 2008 to £245m last year, with sales down 18.8% in the first half of last year before levelling out to give an overall decline of 12.3%, indicating the poor state of the company’s markets.

However, chief executive William McGrath said the company had reacted quickly to mitigate the effects of recession and was now in a far better position to capitalise on recovery.

“The group responded quickly and well (and) was well placed to do so having maintained a net cash position after returning £140m in cash to shareholders in May 2008 following the well timed Foodservice disposal at the end of 2007.

“The board prioritised remaining profit and having more cash at the end of the year than at the start thereby ensuring that the group’s long-term financing arrangements organised in early 2008 remained unaltered,” he said.

Mr McGrath said the stable financial platform meant that the group was free to integrate operations and look to make efficiencies across the business.

It had also helped it to make an additional £2m contribution to the group’s pension scheme.

Trading saw a sharp drop in demand during the beginning half of last year but the situation improved in the second six months and the group said it was hopeful that the pick-up would continue.

With a focus on innovation and new product development, the group said its strategy for the year ahead was to continue to grow and create new markets, while it said the drive to boost renewable energy in homes would be a major theme.

It is also looking to improve penetration into the North American appliance market through its Aga Marvel brand.

It said current trading was subject to the fragile economy and as such, it was adopting a cautious outlook.

“We have focused on having strong business processes and disciplines. We will continue to drive down costs and to generate cash as we did in 2009,” said Mr McGrath.

“In 2010 the group will continue to keep capital expenditure below depreciation and to reduce inventory levels. The important benefits of integrating Aga and Rangemaster in the UK will show through.

“Overall, the key factor is the extent of the revenue recovery.”