Shares in Swallowfield plc (LON:SWL) fell on Wednesday morning after the personal care and beauty group said it expects to report flat revenue, due to “single digit” decline in contract manufacturing business.
In a trading update, the AIM-listed firm said it expects pre-tax profit for the full year to be “significantly ahead” of that reported last year, due to strong performance of its Brands business.
READ: Swallowfield sees shares jump on acquisition of ‘Fish’ grooming brand
The company said its brands business has increased revenues by 16%, and full year profitability will be ‘significantly’ above expectations.
Swallowfield said revenue in contract manufacturing business has declined and was affected by material cost inflations. Also, slower than anticipated start-up of the three major contracts resulted in “significantly reduced” operating margins.
“Whilst cost pressures are anticipated to continue, we expect our contract manufacturing business to return to stronger profitability, as a result of current actions on costs and driven by growth from the new contracts.,” the company said.
In morning trading, Swallowfield’s shares fell 11.9% to 277.50p.