Shares in value-focused consumer goods brand owner UP Global Sourcing (UPGS) surged 10% to 107.75p as a surprise trading update triggered another round of earnings upgrades.
In spite of headwind from recent UK and European retail store closures due to Covid lockdowns, the company better known as Ultimate Products now expects this year’s underlying earnings before interest, taxation, depreciation and amortisation (EBITDA) will be ‘above the market’s current expectations’, having delivered ‘especially strong’ growth over the cyber weekend.
Furthermore, a ‘relentless focus’ on productivity enhancements and increased operating efficiencies has driven operating margin improvement at the developer of affordable consumer goods wares ranging from frying pans and mugs to speakers.
POSITIVE MOMENTUM CONTINUES
Since posting full year results in early November, UP Global Sourcing has seen ‘continuing momentum’ in its order book, with sales through its supermarket and online channels performing ‘particularly well’, continuing the trend of recent years.
Investments in its online business over recent years have led to ‘exceptionally strong sales growth’ during the peak Autumn/Winter trading period and especially on Amazon Prime Day, Black Friday and Cyber Monday.
BOOST FROM BELDRAY
Seeing growth with UK grocers and international retailers, UP Global Sourcing also pointed out that laundry, floor care and heating and cooling brand Beldray has ‘continued to be the standout performer’ from a portfolio that also includes audio brand Intempo, kitchenware brand Salter, luggage brand Constellation and Progress, the cookware and bakeware brand.
‘Our performance with online customers in particular has been exceptionally strong, but our brands also continue to resonate well with supermarket shoppers in both the UK and Europe,’ insisted chief executive Simon Showman.
‘Our offer also appeals to customers who are prioritising their spend on quality homeware products as they spend more time at home, and our cookware, laundry, cleaning, floorcare and kitchen electrical products are all trading very well.
‘While market conditions remain uncertain in the short-term, the strength of our current performance and the ongoing resilience of our business model means that we remain confident in our future prospects.’
BROKER VIEW
Following the upbeat update, house broker Shore Capital upgraded its EBITDA forecast for the year to next July by 10.8% to £12.3 million and its pre-tax profit estimate by 14% to £9.9 million, while also lowering its year end net debt estimate by £3.8 million to £10.1 million.
Seeing further upgrade potential at this relatively early stage of the financial year, ‘if current momentum can be sustained’, the broker also raised its full year 2022 pre-tax profit forecast from £9.3 million to £10.5 million.
Shore Capital reiterated its view that UP Global Sourcing is ‘a strong business displaying material self-improvement, consistently improving the quality of its capabilities and operation, with strong UK market foundations whilst progressively building a meaningful online and international presence that leave the group well placed to deliver sustained growth over the medium to long term’.
