- Record sales helped by Salter buy
- Current trading in line with guidance
- Analysts see further upside for the shares
Oldham-based homeware products maker UP Global Sourcing (UPGS) pleased investors with its pre-close trading update and news current trading was in line with forecasts.
The shares climbed 4% to 131p, continuing an upward trend which has seen the stock gain 20% since the start of the month.
OLD SCHOOL
The firm, which owns some of the UK’s oldest houseware brands such Salter (established 1760) and Beldray (1872), said it expected to post a 13% increase in sales to a record £154.2 million for the year to July.
Most of the uplift came from the acquisition of Salter - the UK market leader in bathroom and kitchen scales as well as making other kitchenware - which completed in mid-July 2021.
Revenues from the core business were £137.9 million, up 1% on the previous year.
The firm noted sales through supermarkets had been particularly strong and now represent its largest revenue segment.
Underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) increased 41% to £18.8 million, taking the operating margin to 12.2% from 9.75% last year.
Chief executive Simon Showman said the group was ‘delighted to have delivered record results despite the challenges of disrupted supply chains and a deteriorating macroeconomic backdrop’.
He added: ‘Increased sales into supermarkets, especially in Europe, have been key to this year’s performance and will continue to be critically important components of our future growth plans.’
EXPERT VIEW
Analysts at Equity Development praised the firm’s margin improvement, which they put down to its strong cost management as well as the Salter acquisition.
They added: ‘The current share price fails to reflect three salient growth drivers of the business, in our view.
‘These include the company’s ability both to manage and acquire key brands, the development of more supermarket and online business and its international opportunity.’
Based on an EV (enterprise value) to sales ratio of 1.5 times and 12 times EV/EBITDA for the year to July 2023, they estimate a fair value of 250p for the shares.
