Brexit delivers profit hit for card manufacturer

Card manufacturer Hallmark has reported a drop in profits which it blamed on Brexit’s impact on the value of the pound.

The Bradford-based company reported pre-tax profit of £1.08m for the year to the end of December 2017, down from £3.5m the year before.

“Following the Brexit referendum, the pound fell significantly against other major currencies and, as expected, this has hadf a negative impact on profitability,” the company said.

Various strategies have been put in place, the company said, to limit the effects of exchange rate fluctuations, including the use of forward contracts to hedge over a longer horizon.

It said the revaluation of these contracts at year end has resulted in a net liability of £2.9m in the year.

The company, which relocated a 500-strong team from the iconic Hallmark House to its sister site at Dawson Lane in south Bradford, saw underlying profit grow from £2.4m in 2016 to £2.5m after taking into account £900,000 of site relocations costs and reversing the effect of the £1.5m gain on the sale of retail stores in 2016.

Turnover for the year fell to £142m, down 5.6% from £150m, which Hallmark said was partly driven by the year on year impact of the sale of retail stores in late 2016. It also saw its market share reduce by 1.4 percentage points to 23.8%.

Hallmark said it continues to make further significant investments in improving infrastructure and strategic initiatives and finished the year with £8.8m of cash at bank compared to £17.4m in 2016. The decrease was attributed to the Dawson Lane refurbishment and the settlement of a £4.9m inter-company loan.

The company remains free from external debt.