LONDON (Alliance News) - Tandem Group PLC shares spiked Monday after the toy, bicycle, and sports & leisure product manufacturer said it expects to achieve "significant" revenue growth in 2019.
Tandem was trading 28% higher at 147.66 pence each.
Tandem expects its revenue in 2018 to be about 12% lower, at GBP32.5 million, than in 2017 but said its pretax profit will only be "marginally" behind 2017. In 2017, the company reported pretax profit of GBP1.9 million.
In the first half of 2018, Tandem's revenue was nearly 30% behind the previous year due to the "exceedingly poor" weather in February and March, large overstock with a "certain national retailer" and the "ongoing demise" of Toys R Us.
In the second half, however, Tandem saw an increase of 6% in revenue, despite a "difficult" economic backdrop. Tandem noted the UK outdoor toy market was down 17% in 2018.
Tandem said its 2018 revenue from its Toys business was behind 2017 but "much less" than the overall market decline. The division's "standout performer" was its L.O.L Surprise! licence. Tandem's Paw Patrol, Batman, Peppa Pig and Disney Princess licences also made a "solid" contribution.
The company's total bicycle revenue decreased in 2018, but the second half was "only marginally" behind its 2017 comparator. Tandem said the unit maintained its operational profit.
Tandem said it launched 600 new products in 2018, helping to improve the company's gross margin.
Looking ahead, Tandem said it started 2019 "very strongly", driven by its MV Sports & Leisure business where the forward order book is "considerably" ahead of the same time last year.
Tandem said it has secured additional business with several national retailers and expects to increase its revenue.
The company said: "We are optimistic about the outlook for 2019. Whilst we are mindful of macro-economic uncertainties, we expect to achieve significant turnover growth and we continue to be extremely confident in our ability to deliver profitability to our shareholders."
Tandem has signed a new agreement with The Walt Disney Co to extend its portfolio of licences for 2019 and beyond and "significantly" expand its range of licences. Tandem's licences for 2019 now include Frozen, Toy Story, Spider-Man, Lion King, Disney Princess and Avengers.
Tandam has also said it has fully redesigned and developed a number of products in its Direct to Consumer unit, which the company believes is "significant".
Tandem Group (TND)