Good morning!

I'm writing this on Sat 6 Aug 2016, to clear my conscience for having missed a day's reporting on Thu 4 Aug. So sorry it's late.

Portmeirion (LON:PMP)

Share price: 905p
No. shares: 11.0m
Market cap: £99.6m

(at the time of writing, I hold a long position in this share)

Interim results, 6m to 30 Jun 2016 - I last reported here on 7 Jul 2016, when surprisingly PMP issued a profit warning - saying that sales were sluggish in S.Korea (its 3rd largest market), and also slowing in the UK. However, management emphasised their belief that the slowdown was only temporary.

In the past, interim figures from PMP have been of relatively little importance, since the overwhelming bulk of its profits tend to be generated in H2 (80% in 2015, and 84% in 2014). This is because some of its top selling lines (e.g. Spode "Christmas Tree") sell heavily in the run up to Christmas. The top selling ranges have annuity characteristics, in that peak sales are highly predictable, as customers add to their collections each year.

Key interim figures;

  • Revenue up 2% to £28.5m
  • Profit before tax down 22% to £1.4m
  • EPS down 24% to 9.87p
  • Interim dividend up 15% to 7.0p

Note that Wax Lyrical was acquired on 4 May 2016, so contributed 2 months figures to the group P&L - adding £1.5m in turnover. So stripping that out, to arrive at organic turnover, it was down 3.1%.

Wax Lyrical seems to have been a good, sensibly priced acquisition;

We are delighted with this acquisition and have already made good progress in achieving the integration benefits which we anticipated.

It made £2.1m profit in 2015, so it sounds as if that figure is likely to be higher in 2016. So with an H2 weighting also, this should give confidence in the full year forecasts. It seems that Wax Lyrical will be masking the weaker performance in the core business.

In terms of its markets, the USA is PMP's biggest market, and is performing very well - H1 sales up 10.3% in dollars, and that's up 17.2% when translated into sterling. This is taking up some of the slack from weak S.Korean & Indian markets, and a recent downturn in the UK (2nd largest) market;

...we did start to see a negative effect on wholesale demand from the UK Referendum on the EU towards the end of the half…

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here