13
February 2024
Ultimate
Products plc
("Ultimate Products", "Company" or "the Group")
TRADING UPDATE, CAPITAL
ALLOCATION POLICY, AND NOTICE OF INTERIM RESULTS
Full year profit performance
in line with current market expectations, planned share buy backs
in-line with new capital allocation
policy
Ultimate Products, the owner of a
number of leading homeware brands including Salter (the UK's oldest
houseware brand, est.1760) and Beldray (est.1872), is pleased
to announce its trading update for the six
months ended 31 January 2024 ("H1 2024").
Overview
During the period, unaudited Group
revenues decreased 4% to £84.0m (H1 2023: £87.6m), with supermarket
ordering held back by overstocking issues, strong prior year
comparatives bolstered by the exceptionally strong demand for
energy efficient air fryers in H1 2023, and some modest revenue
deferral at the end of the period due to the recent disruption to
global supply chains.
The Group has continued to drive
productivity through its focus on continuous improvement, including
the automation of hundreds of tasks across the business. Combined
with lower freight rates in the period, this increased productivity
has led to the Group achieving improved operating
margins.
As the Group moves into H2 2024,
shipping schedules are expected to settle, and peak air-fryer sales
will move out of the prior year comparatives. More importantly,
supermarket overstocking issues are continuing to subside
and following the peak Christmas trading
period more retail customers are reporting normalised stock
positions, allowing an improving order trend for 2024.
At the period end, the Group had a
net bank debt/adjusted EBITDA ratio of 0.4x (31 July 2023: 0.7x).
Throughout the period of seasonal peak trading this KPI remained
below 1.0x, with net debt reaching a seasonal peak of £17.1m (H1
2023: £30.5m) in December.
Capital Allocation Policy
During FY21 the Group increased its
level of borrowings to complete the transformational acquisition of
Salter. The acquisition debt has now largely been repaid. The Board
has, therefore, approved a new Capital Allocation Policy. The
Board's intention is to maintain the net bank debt/adjusted EBITDA
ratio at around 1.0x. The Board believes that this level of
leverage is an efficient use of the Group's balance sheet and
allows for further returns of capital to shareholders. It is the
Board's intention to continue to invest in the business enabling it
to grow, whilst returning around 50% of post-tax profits to
shareholders through dividends, and to supplement this with share
buybacks pursuant to a policy of maintaining net bank debt at a
1.0x adjusted EBITDA ratio. A further announcement will be made in
due course setting out details of the formal Buy Back Programme and
details of the requisite shareholder and regulatory
approvals.
Outlook
The Board anticipates a full year
profit performance in line with current market
expectations*.
Commenting on the performance, Andrew Gossage,
Chief Executive of Ultimate Products, said:
"Amidst a tough but improving consumer backdrop, we are
pleased to have delivered a resilient
performance.
The overstocking issues that have held back ordering at many
of our retail partners, especially European supermarkets, continue
to subside. As the underlying demand for our products and brands
remains robust, customers who had paused their ordering are once
more open to buy. As a result, we remain confident in our
prospects, as demonstrated by our new Capital Allocation
Policy."
Notice of results
The Group intends to announce its
interim financial results on Tuesday 9 April 2024.
*
Consensus market expectations for the financial year ending 31
July 2024 are, adjusted EBITDA of £21.6m and
adjusted EPS of 15.6p.
For more information, please
contact:
Ultimate Products +44 (0) 161 627
1400
Andrew Gossage, CEO
Chris Dent, CFO
Shore Capital +44 (0) 20 7408
4090
Mark Percy
Malachy McEntyre
David Coaten
Iain Sexton
Isobel Jones
Cavendish Capital Markets Limited +
44 (0)20 7220 0500
Carl Holmes (Corporate
Finance)
Matt Goode (Corporate
Finance)
Abigail Kelly (Corporate
Finance)
Charlie Combe (ECM)
Powerscourt +44 (0) 207 250
1446
Rob Greening
Sam Austrums
Oliver Banks
Notes to Editors
Ultimate Products is the owner of a
number of leading homeware brands including Salter (the UK's oldest
houseware brand, established in 1760) and Beldray (a laundry, floor
care, heating and cooling brand that was established in 1872).
According to its market research, nearly 80% of UK households own
at least one of the Group's products.
Ultimate Products sells to over 300
retailers across 38 countries, and specialises in five product
categories: Small Domestic Appliances; Housewares; Laundry; Audio;
and Heating and Cooling. Other brands include Progress (cookware
and bakeware), Kleeneze (laundry and floorcare), Petra (small
domestic appliances) and Intempo (audio).
The Group's products are sold to a
broad cross-section of both large national and international
multi-channel retailers as well as smaller national retail chains,
incorporating discount retailers, supermarkets, general retailers
and online retailers.
Founded in 1997, Ultimate Products
employs over 370 staff, a significant number of whom have joined
via the Group's graduate development scheme, and is headquartered
in Oldham, Greater Manchester, where it has design, sales,
marketing, buying, quality assurance, support functions and
warehouse facilities across two sites. Manor Mill, the Group's head
office, includes a spectacular 20,000 sq ft showroom that showcases
each of its brands. In addition, the Group has an office and
showroom in Guangzhou, China and in Paris, France.
Please note that Ultimate Products
is not the owner of Russell Hobbs. The company currently has
licence agreements in place granting it an exclusive licence to use
the "Russell Hobbs" trademark for cookware and laundry (NB this
does not include Russell Hobbs electrical appliances).
For further information, please
visit www.upplc.com.