Ultraframe shares slide after profits warning

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The Independent Online

Shares in Ultraframe, the garden conservatory group, plunged 32 per cent yesterday after the company warned annual profits would be about £12m, compared with the £19.4m the market had been expecting.

Shares in Ultraframe, the garden conservatory group, plunged 32 per cent yesterday after the company warned annual profits would be about £12m, compared with the £19.4m the market had been expecting.

David Moore, the chief executive, said despite a boom in home improvements in the UK, the company had been experiencing "volatile and competitive" conditions, which meant the year to the end of October would be below expectations. He said the company's traditional core market of people in the 50-plus age group, typically spending about £12,000 on a conservatory, were now seeing higher interest rates offering better returns on savings, which were acting as a disincentive to spend on home improvements. He said the company was now targeting thirtysomethings spending about £6,000 on a conservatory.

A slowdown in big ticket home improvement spending had been identified by the British Retail Consortium some time ago, Mr Moore said, which, combined with a more uncertain outlook, meant the company's trading in the UK had declined. He said gross margins for the company would fall from 55 per cent in 2003 to 50 per cent this year and 45 per cent in 2005.

Ultraframe said its US operations had slumped, as a result of higher production costs and overruns in marketing costs. Its cash flow would also be hit, it said. Its shares fell 35.25p to 75p.

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