Homeware manufacturer Portmeirion (PMP:AIM) has issued a profit warning amid declining demand from Asian markets, causing the share price to crash 22% to 855p.
A disappointing performance by the company’s India distributor and no recovery of sales in South Korea mean pre-tax profit will be ‘materially’ below the £8.6 million achieved in 2015, says Portmeirion.
The company sells a range of homeware, including collectable plates, mugs, glasses and candles.
Cantor Fitzgerald says the profit warning is disappointing but believes earnings will be helped in the second half of the year by a stronger dollar and increased competitiveness in Europe.
However, the stockbroker has downgraded its pre-tax profit forecast from £9.6 million to £7.5 million.
Investors should not be surprised by the profit warning as Portmeirion highlighted declining sales in Asian markets and a 2% drop in sales for the first quarter in an AGM statement on 19 May.
While the company claimed at the time that the Asian issues weren’t a permanent trend, there is clearly reason to be cautious as Portmeirion also flags negative demand in the UK before and after the EU vote.
The weaker pound in the aftermath of Brexit has also failed to boost overseas orders for Portmeirion, although these benefits may still occur in the future. The manufacturer still plans to increase its dividend.