Brand Architek. Regulatory News (BAR)

Swallowfield plc

Trading Update

Swallowfield plc, the full service provider to global brands and leading retailers in the cosmetics, toiletries and household goods sector, issues the following trading update.

The rapid escalation in raw material costs outlined in our interim accounts published in February and reported on recently by a number of businesses in our industry, has been more severe than anticipated. We have continued to work determinedly to reduce the impact on our profitability 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 a result, operating margins for the year ending 30 June 2011 are likely to be around 0.7% lower than previously expected.

We have continued to drive revenue growth in the business in spite of the difficult market background and expect further new product launches in the coming months to continue this trend. We expect sales for the year will 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. Compared to last year's overall performance, the impact of this revenue growth should still more than offset the impact of the higher raw material costs.

Ian Mackinnon Chief Executive commented:

"The UK market has been particularly challenging during the last nine months. In addition to a relatively weak consumer picture, we have, in line with others in the industry, been affected by significant increases in the costs of raw materials and components. We have worked determinedly to reduce the impact on our profitability by passing on these increases wherever possible and by winning new business.

We have driven revenue growth in the business in spite of the difficult market background and expect new product launches in the coming months to continue this trend.

We remain positive about global demand whilst remaining cautious about the UK consumer picture which we do not expect to significantly improve for the next couple of years. Overall, we will continue to work on executing our strategy as previously outlined."

Notes to Editors:

Swallowfield plc is a market leader in the development, formulation and supply of cosmetics, toiletries and related household products to the own label and branded sectors. We pride ourselves on being a customer orientated, innovative, flexible and responsive company. We combine high quality, competitive products with strong customer service and develop close partnerships with our customers facilitating an in-depth knowledge of their requirements.