Much of the bad news contained within UP Global Sourcing’s (UPGS) half-year figures was baked into the share price ahead of the results publication. In February, an update from the consumer goods group warned of a decline in half-year sales and full-year underlying cash profits, triggering a 40 per cent share price drop. Driving this poor performance were ongoing difficulties in the merchandise retail market, and the one-off impact of the deferral of around £4m and £5m of revenues, as a major European customer changed its supply arrangements.
Within the official results, UP – known as Ultimate Products – also highlighted the tough comparison with an unusually strong first half of 2017. The impact of weaker sales was felt more keenly further down the income statement, with operating profits down 41 per cent.
Still, there were signs of progress – enough to pique, or at least reassure, the market’s interest, lifting the shares 5 per cent. The gross margin was stable at 22.4 per cent, and UP opened its new 10,000 sq ft showroom in Germany, where various major retail accounts have launched – generating orders better than management’s expectations. Net debt also fell by 34.9 per cent to £6.7m, although this stemmed largely from a £3.6m fall in net working capital, after the revenue reduction.
Analysts at Shore Capital forecast EPS of 5p for the year to July 2018, against 3.8p in FY2017.
| UP GLOBAL SOURCING (UPGS) | ||||
| ORD PRICE: | 38p | MARKET VALUE: | £31.4m | |
| TOUCH: | 38-39p | 12-MONTH HIGH: | 228p | LOW: 30p |
| DIVIDEND YIELD: | 11.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 8.2p | NET DEBT: | 99% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 (restated) | 68.1 | 6.7 | 7.0 | 1.6 |
| 2018 | 48.4 | 3.9 | 3.8 | 0.8 |
| % change | -29 | -41 | -46 | -49 |
| Ex-div: | 5 Jul | |||
| Payment: | 27 Jul | |||
