Shares in Swallowfield (SWL) plunged on a mixed trading update for the year to June. While the personal care group said trading was in line with expectations, revenues will remain flat year on year – a result of diverging performances from its two businesses. Indeed, double-digit momentum with own-brands was tempered by a single-digit decline within manufacturing.
The brands business enjoyed 16 per cent sales growth, while better margins meant that full-year profits here will significantly exceed management’s expectations. But the challenges facing manufacturing have “significantly reduced” its operating margins. First, there were particularly strong prior-year comparisons, the business also endured material cost inflation, and three major new contracts took longer to get going than previously expected. We understand that these are, now, “in full production”.
