Release Date: September 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales outside of South Korea increased by 5% on a constant currency basis, with the US market showing a 5% growth.
- The cost reduction program is on track to deliver around 10% or GBP4 million in lower overheads across the year.
- The order book for Christmas in the US, UK, and Wax Lyrical home fragrance business is ahead of last year.
- The interim dividend expectations for the year are 7.25p, up from 5.5p last year.
- A new long-term bank facility deal with Barclays has been signed, providing significant facility headroom.
Negative Points
- Overall sales were down 17% due to significant destocking issues in the South Korean market.
- The company reported a GBP2 million loss in the first half, driven by the sales reduction.
- The Nambe brand sales were down due to a weaker economy in the US and reduced footfall in premium department stores.
- The South Korean market saw a 61% decline in sales, with 50% attributed to destocking issues.
- Supply chain challenges continue, with disruptions in travel and higher container rates impacting operations.
Q & A Highlights
Q: How does Portmeirion Group manage revenue stream and stock building in certain markets to ensure smoother order flow?
A: Michael Raybould, CEO, explained that managing order flow is challenging in markets where they don't have their own sales infrastructure, such as South Korea. They rely on distributors who are experts in their markets. The company is working on obtaining better management information on stock levels, particularly in South Korea.
Q: What strategies are in place to drive growth for the Portmeirion and Nambe brands?
A: Michael Raybould, CEO, stated that all brands have been impacted by the tougher macroeconomic environment. To drive growth, the company is focusing on acquiring new listings and accounts, increasing online presence, and launching fresh products to engage consumers.
Q: What are the main areas impacted by the restructuring costs?
A: David Sproston, CFO, mentioned that the restructuring costs affected all departments, with an element of headcount reduction. The focus was on reducing costs across the board, including operational sites and infrastructure.
Q: How much lower is the renewed energy contract for Q1 2027 compared to current rates?
A: David Sproston, CFO, indicated that the renewed energy contract is at least 10% lower in each of the two financial years over the current rate.
Q: What is the company's approach to inventory reduction and net debt management?
A: Michael Raybould, CEO, highlighted that the company has been successful in reducing inventory, particularly focusing on UK-made ceramic stock. The aim is to continue reducing inventory and net debt by 5% to 10% this year.
Q: What is the company's strategy for Wax Lyrical's growth and profitability?
A: Michael Raybould, CEO, noted that Wax Lyrical has a new strategy focused on winning business in high footfall grocery channels. The company expects growth and improved profitability over the next couple of years.
Q: How does Portmeirion Group leverage its brand strength in the marketplace?
A: Michael Raybould, CEO, emphasized that the company's well-known brands, high-quality products, and wide distribution network across multiple countries are key differentiators in the marketplace.
Q: What is the company's view on share buybacks?
A: Michael Raybould, CEO, stated that the company does not have plans for share buybacks, as they are focused on investing cash back into the business for growth and improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
