Tuesday, June 15, 2010

Swallowfield plc (Public, LON:SWL)

CompanyCosmetics supplier Swallowfield has warned annual profits to June will disappoint, due to customer delays and delivery issues.
Swallowfield, which develops a broad array of cosmetics, toiletries and household products in close partnership with customers in both the own label and branded sectors, traditionally sees slow trading between January and April, ahead of a pick-up in activity levels in May or June.
However the group, led by CEO Ian Mackinnon, has warned ‘the pick up during May and June to date has not been to plan’, with ‘a number’ of orders rescheduled by customers into July and August and delivery issues arising from within its component supply base also creating delays. The result of all of this is that June 2010 profits are now only likely to be ‘approaching’ levels attained in 2009, when the company maintained operating profits at £1.5m. On the positive side, sales will show growth once again, coming in ahead of the £49.1m top line reported for June 2009.
Whilst the news on profits is a short-term disappointment, Swallowfield is still a resilient business with a compelling growth story. At the interim stage, pre-tax profits increased 27% to £740,000 and the dividend was lifted by more than 22% to 2.2p. In addition, the current order book stands at £16.9m, 35% higher than a year ago, with Swallowfield seeing high levels of new customer enquiries which represent the fruits of Mackinnon’s strategic plan to rapidly grow and develop the business.
Originally flagged up here as a speculation at 103.5p last November, Swallowfield shares, down from their 150p 52-week peak, offer solid long-term growth, yield the best part of 5% and are not to be sold at these levels.

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