Four months ago, Investors Chronicle reported that around 60 per cent of Portmeirion's (PMP) products from earthenware to glassware were imported mainly from China. Then the EU imposed an anti-dumping duty on Chinese-made tableware, ranging up to almost 60 per cent. Initially, Portmeirion thought it could move production elsewhere (to Bangladesh) or to other Chinese factories because the duty is calculated on a factory-by-factory basis. But maintaining quality levels proved more difficult than expected.
The upshot is that Portmeirion paid £400,000 of duty in the half year and that accounts for most of the profit fall. The good news is that a combination of price rises, the main Christmas selling season still to come and a lift in internet sales in the UK and US should mean higher 12-month sales and profits.
The importance of the second half cannot be underestimated. Last year it accounted for 59 per cent of sales but 80 per cent of pre-tax profits. The current period is already benefiting from "strong" Christmas orders and good sales of Prince George mugs, plates and dishes. The revamped UK website now outsells the largest factory shop and the US website went live four weeks ago. Historically, the Americas has been Portmeirion's largest market, but in the last six months the region has been overtaken by South Korea.
Broker Panmure Gordon forecasts adjusted 2013 pre-tax profits of £7.1m (£6.75m in 2012), which suggests EPS of 51.5p, up from 48.4p.
PORTMEIRION (PMP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 640p | MARKET VALUE: | £68.2m | |
| TOUCH: | 630-650p | 12-MONTH HIGH: | 710p | LOW: 460p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 247p | NET CASH: | £5.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 22.8 | 0.85 | 9.57 | 4.50 |
| 2013 | 23.8 | 1.38 | 6.03 | 5.00 |
| % change | +4 | +62 | -37 | +11 |
Ex-div: 4 Sep Payment: 1 Oct | ||||
