Ultimate Products warns of subdued consumer demand

Shares of Oldham-based consumer goods firm Ultimate Products fell about 15% after it said its first-half revenues fell 5.7% to £79.4 million and “market conditions in the UK remained subdued due to weaker consumer demand for general merchandise.”

The company said it believes its full year revenues will now be broadly flat compared with the prior year.

Ultimate Products, owner of a number of homeware brands including Salter and Beldray, revealed the news in a trading update for the six months ended January 31, 2025.

“During the period, unaudited group revenues decreased 5.7% (£4.8m) to £79.4m (H1 2024: £84.2m),” said the Oldham firm.

“Market conditions in the UK remained subdued due to weaker consumer demand for general merchandise, while international sales grew by 12% to £29.1m over the same period.

“As anticipated, the impact of air fryer comparatives continued to weigh on like-for-like performance, with sales in this category down 46% (£4.5m) to £5.2m.

“This effect was most notable in Q1, when group sales were down 9.3% year-on-year. However, trading improved in Q2, with sales down by a more moderate 2.2%.

“The group entered the calendar year 2025 with the H2 order book up an encouraging 24% year-on-year, led by strong forward orders from our larger customers.

“However, since the start of January 2025, the current challenging trading conditions faced by some of the group’s retail customers have impacted short-term sentiment and has led to a moderating in the pace of new orders.

“As a result, the group’s H2 2025 order book is currently up 13% year-on-year, driven by strong forward orders from international customers (up 20% YoY) and a 7% increase in the UK. Therefore, the board believes that the group’s full year revenues will now be broadly flat compared with the prior year.

“The group has maintained its focus on productivity through continuous improvement, which helped to keep operating expenses flat in the period despite continuing cost pressures.

“Investment in robotic process automation and AI will also help mitigate upcoming cost impacts, including the increases in employers’ National Insurance contributions (£100k for the current year, with a full-year effect of £300k) as well as the impact of Extended Producer Responsibility (EPR) legislation (expected to have a full year effect of £300-£500k).

“The group also incurred c£2.0m in additional shipping costs during H1 due to elevated freight rates over the summer. As a result, adjusted EBITDA for H1 is expected to be in the region of £7.0m. With H2 expected to see a return to top-line growth and freight rates having settled at more normal levels, the board now expects adjusted EBITDA for the full year to be in the range of £14m-£16m.”

Ultimate Products CEO Andrew Gossage said: “As expected, the first quarter of FY25 proved challenging, driven by subdued consumer spending, global shipping disruption, and the fact that we were lapping the tail end of the spike in air fryer sales last year.

“However, trading conditions in Q2 showed some improvement, resulting in a more stable top-line performance for the quarter.

“Looking ahead, we are cautiously encouraged by both the improved shipping rate environment and by the healthy order book that we have in place for the rest of the year, led by our international business. We therefore anticipate a stronger performance in H2.

“While upcoming cost pressures and the ongoing challenges faced by some of our retail customers inevitably create some near-term uncertainty, we remain confident in our medium-term strategy, particularly given the growing appeal of our brands to shoppers across mainland Europe.”