LONDON (Alliance News) - Personal care and beauty products company Swallowfield PLC Monday said it returned to a small pretax profit in first half of the year, supported by revenue growth, and said it expects to report strong full-year pretax profit growth versus the prior year, but also warned that it is still facing pricing pressure in a very competitive trading environment.
The cosmetics, toiletries and household goods supplier reported a pretax profit of GBP56,000 for the six months to January 28, compared with a loss of GBP24,000 the year before, as revenue rose 2.1% to GBP26.0 million from GBP25.4 million.
It said strong export growth of 12% offset some weakness in the UK market performance. The company said direct export now represents 39% of its total revenue.
The company said it kept a tight lid on costs and working capital, which helped reduce its net debt at the end of the half year to GBP3.1 million from GBP4.6 million last year.
Swallowfield said the marketplace remains very competitive, and while it expects to report strong pretax profit growth versus the prior year, on the back of new product launches, it said that in terms of run-rate profitability, it expects a more "significant" full-year benefit to be delivered in its next financial year.
"The UK and European market place remains extremely competitive, with pressure on pricing and continuing uncertainty around the Euro. The second half year performance remains dependent on the exact timing of planned product launches, the impact of wider economic conditions and underlying consumer demand," the company said in a statement.
Swallowfield said it has a number of brand launches scheduled for the second half of the year, which it said is expected to "positively impact" its future performance.
"We are pleased with a solid first half performance, with continuing improvement in sales, margin and cash generation. Having stabilised the base business performance we have been able to make good progress on a number of the key strategic pillars with incremental profit streams starting to benefit the second-half year," said Chief Executive Chris How in a statement.
Swallowfield said that as it makes investments in both working capital and brand marketing, it will keep a relatively conservative approach on its dividend policy. As a result, it did not propose an interim dividend.
Swallowfield shares were trading 4.4% lower late morning Monday at 107.50 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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