Good afternoon!

This year certainly seems to be drawing to a close with a flourish - the SMXX benchmark which I follow is hitting new all time highs. This does seem surprising, given all the uncertainty over Brexit, and various other problematic geopolitical issues globally.

There are only 3 or 4 trading updates I'm going to comment on today, so this report should be finished by about 3pm.



Pittards (LON:PTD)

Share price: 78.3p (down 10.3% today)
No. shares: 13.9m
Market cap: £10.9m

Situation in Ethiopia and trading update- the title of this RNS sounds ominous, and the 10.3% share price confirms that, before I've even read it.

Problems in Ethopia have affected production;

Although the state of emergency is still in place, the Foreign and Commonwealth Office has lifted its advisory travel restriction.

Operations at the Company's tannery in East Shewa were affected by the disruption; some production was lost and levels have not yet returned to the levels pre-disruption.

The effect has to some extent been mitigated by undertaking production in the UK but there will nevertheless be an impact on the results for the second half of the year.

So it's an H2 profit warning, and presumably a full year warning too.

Demand is depressed too;

The prolonged depressed demand for leather has culminated in disappointing sales volumes in the last few months of the year. Together with the disruption in Ethiopia, the overall performance for the full year ending 31 December 2016 is likely to be lower than our expectations at the time of the half year results.

Yes, there we are - it is a full year warning, but no indication is given of how much lower profits are expected to be.

What are they doing to remedy things?

The new management team is now in place and further progress has been made in the second half to simplify the Group to better position it for growth.

Valuation - it's difficult to value on a PER basis, as it looks as if this year is likely to be minimal profit.

There is a large discount to NTAV, but that's because the company has extremely inefficient, high levels of inventories.

My opinion - I do sometimes wonder why I bother following this company, as it seems to continuously disappoint.

A few years ago this business was nicely profitable. So I would need to better understand why…

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