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.
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.