Swallowfield reports big rise in profits despite stagnant revenues

By Simon Pitman

- Last updated on GMT

Related tags Economics Euro

UK contract manufacturer Swallowfield has reported a big rise in profit for the full financial year, but sales growth is held back by tough conditions in the domestic market.

The Wellington-based company said that sales for the full year ending 30 June rose by 0.7 per cent to £57.9m (€72.6m), compared to the financial year 2011- 2012.

Sales from overseas business increased by 11.5 percent over the year, underlining how the company is continuing to grow in developing markets, while also stressing the fact that the domestic UK market is currently under performing.

In particular the company said that its business in South Africa was continuing to grow, while its support offices in both China and France had managed to win new business during the course of the year.

Expansion of manufacturing facilities

Likewise, it has also expanded its manufacturing facilities and capabilities, adding two new production lines at its Bideford, UK facility, as well as moving its joint venture in China to a larger factory on the outskirts of Shanghai.

On a category basis, the company, which is focused on the production of cosmetics, personal care and household goods, said that it had expanded its presence in the areas of skin care, hair powder and sun care formulation during the course of the new year.

Difficulties in the Euro Zone were continuing to impact most of the major economies worldwide, which have been particularly evident in both the US and China economies, which have slowed down significantly in the course of the past year.

Slower sales did not affect profits

However, the problems in the domestic market did not impact the company’s  for the year, which  rose by 17.3 per cent to £1.56m, a figure that also helped it to cut back on net debt by 12.8 per cent, from £4.7m to £4.1m.

“Despite the continuation of the tough economic climate the business has made good progress during the year, increasing its top line and reducing its cost base,”​ said Ian Mackinnon, Chief Executive of Swallowfield.

However, Mackinnon said he remains positive about the future: “We believe that long-term growth prospects remain good on the back of our product technologies, innovation and customer service,”​ he said.

Four years ago Swallowfield expanded its range of services to include market analysis, formulation, design and packaging developments as well as product manufacturing, sourcing and logistics – making it a full service contract manufacturer and service provider.

In recent years the company has also built up a presence in emerging markets having opened a production plant in the Czech Republic and also forging joint manufacturing venture in China.

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