A sudden rebound in market confidence could be on the cards, according to Aga Rangemaster, the Solihull-based manufacturer of upmarket cast-iron cookers.
The company, which makes traditional Rayburn products, served up a flat set of interim financial results. But chief executive William McGrath was upbeat, describing demand for his company’s products, which range from £1,600 to £7,500, as “resilient”.
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.
Aga’s well-heeled consumers, however, are believed to be holding fire on committing themselves to new purchases until the credit squeeze and associated banking crisis play themselves out, be believes. They are not short of cash, just wary of spending until they are sure which way the economic winds are blowing.
“I would not be surprised to see a sudden rebound – this may well be an adjustment period,” he said.
Aga, which operates a successful showroom in Birmingham’s luxury Mail Box retail centre, is attacking its markets with initiatives to help customers cut fuel bills. These include programmable gas-fired cookers and units that operate on half-price off-peak electricity.
The company said that its order intake dipped by five per cent this summer amid challenging consumer markets.
This followed flat sales for its premium Aga and Rayburn ranges in the first half of the year. Volumes for its more accessible Rangemaster product were also steady.
Overall, revenues for the six months to June 30 on a continuing basis rose by 1.9 per cent to £145.1 million on the back of higher prices.
Overall pre-tax profits were flat at £12.3 million, although basic earnings per share rose by 18.8 per cent to 9.5p. On the strength of that, the half-time dividend is to be increased for the seventh year running – this time by 3.9 per cent to 4p per share.
In Ireland, where the group’s market this year has been described as “very weak”, Aga’s performance was markedly worse with “sharp” falls for its oil-fired Stanley cast-iron range, and a 20 per cent decrease in Rangemaster sales.
Stanley is seeing revived demand for ovens that operate off solid fuels, including wood.
The firm, which employs 3,000 people in the UK, is hoping this year’s Rangemaster sales will top the 76,000 units sold in 2007. Last year it achieved 19,600 sales of its Aga, Rayburn and Stanley makes.
As well as the consumer downturn, Aga said it was also having to wrestle with higher steel costs and energy prices during the period. In order to save costs it is moving to a new combined head office and distribution centre in Leamington Spa.
Trading at the group’s home interior division Fired Earth was making good progress, it said, with orders up by nearly ten per cent.
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.
Mr McGrath said in a stock market announcement: “Our performance in the first half proved resilient.
“Having made disposals, returned cash to shareholders and still with net cash, the business base is strong. Our products – including exciting new ones such as programmable gas Agas, wood burning stoves and induction hob range cookers – are well attuned to the needs of today’s customers and we expect to emerge stronger and even better positioned following this current economic down cycle.”
Aga Rangemaster shares gained six per cent yesterday, closing 10.5p up at 198.25p.