UK contract manufacturer confident about the coming months

By Katie Bird

- Last updated on GMT

Related tags: Cost, Revenue

A sales increase and continuing demand leads UK contract manufacturer Swallowfield to remain confident for the future.

Sales for the first half of the year (the 28 week period ending 10 January 2009) were up 7 per cent on the same period last year, reaching ₤25.24m (€28.34m).

Sales growth expected

Some revenue growth is expected in the second half of the year, according to Swallowfield’s non-executive chairman Shena Winning.

“Despite the weaker economic outlook for 2009 and beyond, levels of new sales enquiries are at a high level and some revenue growth is expected in the second half,”​ she said.

However, results were impacted by higher raw materials and energy costs, as well as costs related to the opening of the French office and the Czech facility.

Operating profit before exceptional items stood at ₤0.74m, in comparison to ₤0.83m in the same period last year.

The sterling’s depreciation dealt a mixed blow to the company as it drove cost increases on many of the raw materials sourced from outside of the UK.

Nevertheless, the company expects the weak pound to boost competitiveness in the medium term.

Full year in line with the last

Looking to the future, chairman S J Winning said the company expects the full year profit performance to be broadly in line with last year, excluding exceptional items, with some revenue growth (compared to last year’s figures) in the next half year.

Commenting on the rest of the year Winning said the company would benefit from its mixed portfolio.

“It is possible that consumers may trade down in their purchasing of toiletries, household and cosmetics products and therefore it is important that we maintain our current spread of business from the prestige through to the mass market,”​ he said.

In addition, the company’s recently opened Czech facility has started processing orders and is expected to contribute to the full year performance, and the drop in energy costs should help reduce costs in the second half of the year, according to Winning.

Related topics: Business & Financial

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