Cracks appear in pottery maker’s profits
Profits have tumbled almost 10% for Stoke-on-Trent pottery maker Portmeirion after the business was impacted by major acquisition costs and falling export levels.
The purchase of candle maker Wax Lyrical for £17.5m last May and a 21% fall in sales in South Korea, previously one of its strongest export markets, saw the group’s full year profits slump from £8.6m in 2015 to £7.8m last year, a fall of 9.7%.
Nevertheless, revenues held up well, rising almost 12% to £76.7m (2015: £68.7m).
Dick Steele, non-executive chairman, Portmeirion, said: “We are delighted to be reporting an eighth consecutive year of record revenue, notwithstanding the challenges faced by the group during the period which have affected profits.
“Our core values of innovation, targeted product development and operational excellence remain unchanged, and we are pleased to report on the success experienced by the continued integration of Wax Lyrical.
“Trading in the first two months of the current year is ahead of the comparative period in 2016 on a like-for-like basis. The outlook for 2017 is positive and the issues experienced are being overcome by proactive management.”
The group said that at a constant US dollar exchange rate its revenue increase would have been lower at 6.5%, adding the part year sales for Wax Lyrical consolidated within the total revenues were £10.4m (2015: £nil), which represent eight months of the financial year.
The Wax Lyrical acquisition helped to make the UK the company’s largest market in 2016. Excluding the candle maker’s contribution, UK sales from original Portmeirion businesses increased by 2.1% over 2015. Total UK sales were £27.1m in 2016 (2015: £17.9 m).
It said it remained cautious about the effect on sales of the UK’s decision to quit the EU, although it was likely to be some time before the actual effect is known.
The United States provided a revenue uplift of 8.7% in translated figures, which is equivalent to a decrease of 3.7% in local currency. It said there were hopeful signs in the US that the economy remained on the upswing, but some doubt remained about how Government policy would affect importers.
One strong area for the group was its internet sales in the UK and the US, which totalled £3.3m in 2016, a 31.8% increase over 2015.
Sales into South Korea fell by a further 21.2% in 2016 to £9.7m, meaning that on a two-year basis sales to the country have fallen by £5.4m. It said it hoped the market would stabilise but had been disappointed.
“We are working closely with our exclusive distributor in South Korea to rebuild sales,” it said.
