Sales of traditional cast iron cookers have gone cold as West Midland-based manufacturer Aga Rangemaster feels the chill of the housing market slump.
The Solihull company, which manufactures the Middle England “must-have” product at prices of up to £6,000 issued a profit warning after suffering a 15 per cent fall in orders in recent weeks.
As recently as August, Aga chief executive William McGrath was optimistic that an upturn in consumer confidence was imminent.
Aga Rangemaster said in an interim trading report: “Recently orders have fallen more than 15 per cent below last year. With the outlook for the UK economy remaining so uncertain, it is now likely that operating profits in the second half will be appreciably below those achieved in the first half.
“We have increased market share but the market itself has been affected by the fall in the number of housing transactions and order levels have recently been significantly below last year.”
This is set to leave second-half operating profits “appreciably below” the £9 million seen in the first six months of 2008.
Against that, the company, which has a record of conservative management, has a strong cash base - £16 million as at June 30 - as the result of steps taken over the past year.
“In addition management is confident that the group can trade soundly through the cycle due to its strong balance sheet, market leading brands and an experienced management team focused on costs,” the statement went on to say. The 15 per cent decline represents a deepening of the slowdown reported two months ago when orders fell five per cent over the summer.
Sales of “big-ticket” items such as cookers, washing machines and fridge freezers are seen as most at threat from a property slump as fewer home sales reduces demand.
This has put pressure on a host of major retailers in the sector such as DSG International, which owns Currys and PC World.
Aga’s cast-iron cooker sales have slowed amid consumer caution despite interest in the product, although it has had some success in getting existing customers to trade up to better models.
Orders of the Rayburn model - which allows people to heat their homes as well as cook - were flat, although the company believes the range has “good prospects” as consumers focus on heating bills and low running costs.
Its wood-burning cookers and stoves have also performed strongly as customers hit by soaring gas and electricity bills this year look to make savings.
Mr McGrath said: “Consumer markets are clearly weak and the impact of the macro-economic environment is being felt.”
But he added: “We are particularly encouraged with the sales of wood burning cookers and stoves as we see the customer taking a more proactive economical and environmental position in the home.”
The firm is making £6 million in savings to cope with the tighter consumer environment, including the relocation of its headquarters to the Rangemaster distribution centre in Leamington Spa.
It has as yet no plans to cut production levels, but Mr McGrath said he was “keeping an eye on the warehouse” to prevent stocks building up to unacceptable levels.
The group, which sold its foodservice arm for £265 million last year, makes its flagship Aga ovens at a manufacturing operation at Coalbrookdale near Telford, while Rangemaster products are made at Leamington Spa.
Numis Securities analyst Andrew Wade said: “Given its exposure to both the big-ticket and home categories, this slowdown comes as little surprise. The business falls squarely into the most under-pressure sub-sectors.”
