Pittards FY profit to miss expectations
By Michele Maatouk
Date: Thursday 23 Feb 2023
(Sharecast News) - Pittards slumped on Friday after it said full-year profit was set to miss market expectations after it took a hit from a weakening of the pound and weaker sales in the last quarter of the year.
In an update ahead of its results for the year to the end of December 2022, the company - which makes advanced leather and luxury leather goods for retailers, manufacturers and distributors - said most of the year showed a steady recovery from the Covid impact.
However, the latter part was affected by a number of factors which mean that even though it expects to generate an EBITDA for the year, pre-tax profit will miss expectations.
It pointed to the sharp fall in the pound in the aftermath of the mini budget in September and said this had a progressive impact on its UK business due to the US dollar overdraft and maturing hedges, which had to be unwound with a net negative effect of around £1.5m on cash.
Pittards noted that US dollar revenues make up a big chunk of sales and said the group's hedging strategy involves a combination of forward US dollar hedges and a US dollar overdraft, aimed at allowing the business time to adjust selling prices and costs in the event of a change in the value of the pound.
The company also said sales were weaker in the last quarter of the year. This was due to customers destocking prior to Christmas and an early Chinese New Year.
"There remains some uncertainty around sales volumes and inflationary pressures for 2023, along with some continued supply chain challenges," it said.
"However, we anticipate that the financial impact of any lower sales volumes will be partially mitigated both by the lowering of the group's cost base and the continuing weakness of GBP."
At 1610 GMT, the shares were down 14% at 40.20p.
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