News Column

AGA Rangemaster Cooks Up Higher First-Half Sales And Narrows Loss

August 22, 2014

Rowena Harris-Doughty

LONDON (Alliance News) - AGA Rangemaster Group PLC Friday said an improving UK housing market drove higher sales of its cookers in the first half of the year, while it narrowed its losses after last year it was hit by restructuring costs in its businesses outside the UK.

The range cooker maker said it managed to narrow its pretax loss to GBP0.3 million for the six months to June 30, compared with a loss of GBP2.4 million in the first half of last year, helped by higher revenue, but mainly due to last year's results being hit by GBP1.4 million in restructuring costs in its Irish and North American businesses.

"Our markets have picked up but remain inconsistent and variable. Uncertainties around mortgage availability and interest rates are a contributing factor. Even so, the willingness of consumers choosing to spend money on kitchen appliances has increased in the UK and in North America," the company said in a statement.

Revenue in the first six months of the year rose 3.3% to GBP123.5 million, up from GBP119.5 million in the first half of 2013, driven by strong sales growth in the UK and buoyed by particularly strong trading in June. It said UK sales made up 66% of revenue in the first half, while the proportion of overseas sales fell to 34% from 38%.

Operationally, AGA Rangemaster signalled a turnaround in its markets and improvements in its own operational efficiency after recent restructuring.

However, the group's pension scheme also remains a significant burden. The company has a large pension scheme relative to the size of its overall business, and it has been warning about the costs of funding the scheme for several years. It hasn't paid a dividend for two years, having agreed with the scheme's trustees to halt payouts as it tries to reduce the deficit, which stood at GBP46.7 million at the end of June.

AGA Rangemaster was hit hard by the financial crisis and ensuing economic downturn as it is heavily dependent on a strong housing market for sales of its products. In its statement, the company said the recovery in the UK and US is now entrenched, but still has some way to go.

"The weak performance in Ireland has bottomed out but still leaves us work to do to obtain the benefits of last year's rationalisation plan - something that applies equally to Grange in America," it said.

"The indicators are encouraging that we will see a higher revenue growth rate in the second half bringing improved trading results for the year".

At the half year order intake was up 6%, driven by strong order intake of its Rangemaster cookers in the UK, although it said a decline in France, its largest export market, continues to remain weak and competitive. The company said it saw strong sales growth in electronics retailer Dixons Carphone PLC and department store John Lewis, part of the John Lewis Partnership.

The company said that its AGA Marvel North American subsidiary saw sales volumes up more than 10% in the first-half, while Fired Earth had a strong sale period leaving order intake so far this year up over 14%.

The company's Fired Earth business - which makes kitchen and bathroom fittings likes sinks and taps, as well as wall and floor coverings - was particularly hard hit by the downturn, but returned to profitability in 2013 for the first time for several years.

Its furniture making business Grange, has on the other hand continues to struggle. It said it saw a "satisfactory" trading performance in Europe from Grange, but was offset by weak trading in North America as it reduced its store footprint.

The group has been investing in new products and marketing, however is also trying to drive growth organically by expanding in international markets like China, Germany and Russia.

"This autumn should see our first sales to consumers in China. Our new agent in Germany is making good progress in introducing range cooking to a market which has been traditionally completely dominated by built-in cookers," it said.

Last month, the group launched its new AGA product, AGA City60, designed for "city living" like apartments and terraced houses, which it hopes will broaden its market and customer base.

"We now have the market wind behind us and the product and distribution in place to benefit. The AGA City60, in particular, can grab the attention of new urban consumers and is an important ingredient to our growth plans," said Chief Executive William McGrath in a statement.

AGA Rangemaster shares were up 1.7% to 156.563 pence in early trade on Friday.

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Source: Alliance News

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