Shares in consumer goods brands owner and manager UP Global Sourcing (UPGS) rallied 5.5% to 223p on Monday after the company guided towards a forecast-beating 36.6% rise in annual underlying pre-tax profit, underpinned by growth at supermarkets and through other retail channels.

Better known as Ultimate Products, the company also added that the current year order book for its core business is ahead of this time last year.

COMFORTABLE EARNINGS BEAT

For the year to July 2021, UP Global Sourcing’s pre-tax profit increased by almost 37% to £11.2 million, comfortably ahead of the £10.8 million called for by consensus.

And in the face of ‘significant’ operational and shipping disruption caused by Covid-19, sales surged 17.9% higher to £136.4 million, ahead of previously upgraded guidance thanks to a strong end to the year.

BROAD-BASED GROWTH

Management stressed that the revenue growth was generated across each of the group’s four strategic pillars; international, supermarkets, online channels and discount retailers.

Current trading is in line with expectations, though UP Global Sourcing said that the 2022 order book for the core business is ahead of this time last year.

This excludes the recent £32 million acquisition of the Salter housewares brand in the UK, a transaction expected to be ‘significantly earnings enhancing’ in the current year.

Oldham-headquartered UP Global Sourcing has advanced the development of its brand portfolio through the acquisitions of the long-standing Salter brand in the UK as well as the Petra kitchenware brand in Germany.

These acquisitions have built upon brands including Beldray, the leading value-based home cleaning brand, as well as Progress and Kleeneze and not to mention its exclusive licence to use the Russell Hobbs trademark for cookware.

‘Our business is emerging from the pandemic with closer customer relationships, a stronger portfolio of products, and in excellent financial and operational shape,’ enthused CEO Simon Showman.

‘In addition, the acquisition of Salter, the UK’s oldest housewares brand, has delivered a step change in the depth and quality of the group’s brand portfolio, providing further opportunities for future growth both domestically and internationally.’

THE SHORE CAPITAL VIEW

For now, Shore Capital is sticking with its year-to-July 2022 pre-tax profit estimate of £15.7 million, for earnings of 13.8p and a forecast dividend of 6.9p.

The house broker views UP Global Sourcing as ‘an increasingly core holding in a small cap consumer portfolio, with the potential for ongoing upgrades and rating expansion as the building quality of the group comes increasingly to the fore’.

Shore Capital believes UP Global Sourcing ‘really is a class act, a view we have that is conditioned by the positive evolution of its excellent showrooms in Oldham, Koln and Guangzhou. The progress is manifested not just in functionally and visually attractive value orientated products but also the associated high service levels, which we believe have been central to UP evolving from trading roots into a consummate designer and merchandiser of proprietary goods.’

READ MORE ON UP GLOBAL SOURCING HERE

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Issue Date: 23 Aug 2021