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Walker Greenbank dodges profit warning despite tough trading conditions

The company's strategy going forward will be a sharp focus on driving the brands

Walker Greenbank PLC -

Walker Greenbank PLC (LON:WGB) shares moved higher after the posh wallpaper maker maintained full-year guidance despite a tough first half.

Revenue in the six months to the end of July rose 2.2% to £55.9mln from £54.7mln the year before.

Brand sales rose 1.2%, or 0.1% on a constant currency (CC) basis, compared to the same period of 2018. In August, the company had indicated brand sales in sterling terms were only up 0.4% and were down 0.7% in CC terms.

Licence income was up 60% year-on-year, both in sterling terms and on CC basis.

Total manufacturing sales including group sales were up 5.1% while third-party manufacturing sales were down 4.7%, largely because of lower UK sales.

Profit before tax eased to £3.52mln from £3.87mlm the year before. Underlying profit before tax, which among other things excluded £694,000 of restructuring costs (2018: £95,000) and an unchanged amortisation charge of £508,000 for acquired intangible assets, rose to £4.57mln from £3.91mln the previous year.

The luxury interiors firm has a policy of paying out 30% of retained profits as dividends and expects to maintain that payout ratio this year; at the interim stage, the dividend was shaved to 0.52p from 0.69p.

Net debt at the end of July had fallen to £7.7mln from £9.2mln at the end of January.

Lisa Montague, the chief executive officer, said significant progress had been made on the company’s strategic and operational review.

Efficiency and cost-saving initiatives are expected to deliver £2mln of annualised cost savings of which roughly £1mln will be delivered in the second half of the current financial year.

"Trading in the first half of the year was in line with the board's expectations and continues to reflect the challenges affecting the consumer sector both in the UK and internationally,” Montague said.

“We have made significant progress with our strategy review and have begun taking steps to increase the focus of the business going forwards to drive sales and increase efficiency. At this stage of the year, as we enter the autumn selling period, we continue to expect the full-year out-turn to meet the board's expectations," the chief executive added.

Shares in Walker Greenbank were up 2.7%.

Quick facts: Walker Greenbank PLC

Price: 54.266 GBX

Market: AIM
Market Cap: £38.52 m

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