Portmeirion, a ceramics manufacturer and retailer based in Stoke-on-Trent, recently reported a seasonal first-half adjusted pre-tax loss of £2 million. This loss was mainly due to a 17% decrease in revenue to £36.9 million, which was a result of destocking in South Korea. However, the company has strong second-half order books, which is a positive sign for future growth.
The company’s brands, including Portmeirion, Spode, Wax Lyrical, Royal Worcester, Pimpernel, and Nambé, are sold in over 80 countries, with international sales contributing to more than two-thirds of the group revenue. North America is the largest market for Portmeirion, accounting for 40% of sales in the first half, followed by the UK (35.5%), South Korea (15%), and the rest of the world (9.5%).
Despite the challenging first-half results, the UK and US regions are showing sales growth of 11% and 5%, respectively. New listing wins for Wax Lyrical in the grocery segment have led to a 25% growth in sales, with strong Christmas order books in the US supporting future growth.
Management has implemented cost-cutting measures, reducing costs by £4 million, cutting energy costs by 10%, and fixing gas prices until March 2027 to mitigate future energy market volatility. Even though full-year revenue is expected to be 3% lower than in 2023, the company is maintaining its guidance of 50% growth in full-year pre-tax profit to £4.5 million.
Shareholders can expect growth in dividends, with a forecasted increase in the payout per share from 5.5p to 7.5p. The company’s net debt is predicted to decrease from £13.4 million to £4.9 million by the year-end, allowing for further financial stability and growth opportunities.
Analysts predict that even a modest increase in annual revenue to £105 million could significantly boost pre-tax profit and earnings per share in 2025. This growth potential has led to an attractive prospective dividend yield of 5.4% for next year and a low forward price/earnings ratio of 5.7, making Portmeirion’s shares a compelling investment opportunity.
In conclusion, despite the challenges faced in the first half of the year, Portmeirion’s strong second-half order books, cost-saving initiatives, and growth prospects position the company for future success. Investors are advised to consider buying shares in Portmeirion as the company continues its path towards increased profitability and shareholder value.
