The supplier of cosmetics and toiletries Swallowfield has today warned that its operating margins for the year ending on 30 June 2011 are likely to be around 70% lower than previously expected. The above due to the fact that the escalation in raw material costs has been more severe than it was anticipating only three months ago.As well, its chief executive says that the company continues to be cautious on the UK market, which it describes as having been particularly challenging during the last nine months. In fact, it does not expect to see a significant improvement in the UK consumer picture for the next couple of years. However, Management has indicated that Swallowfield has tried to compensate for the above by, "passing on these increases wherever possible although a combination of a weak consumer environment and time-lags will inevitably affect our ability to do so in the short-term". As well, they point out that the company has continued to drive revenue and that it is planning new product launches. Despite all of the above sales for the year are expected to show double digit growth versus last year, with a "much stronger performance in the current second half of the year than in the first half", which should more than offset the higher raw material costs. Lastly, its chief executive has added that Swallowfield continues to be positive about global demand. Shares of Swallowfield closed today at 112.5p, having fallen by 3.43% in London trading. AB