International sales help boost contract manufacturer Swallowfield

By Simon Pitman

- Last updated on GMT

Related tags Manufacturing

UK-based contract manufacturer Swallowfield says that big growth from international clients has helped increase the company’s results for the first half financial year.

The company said that sales grew by a total of 7.4 per cent to £31.3m (€36.5m), a figure that also reflected a 23.4 per cent increase from direct international revenue generated by the export side of the business.

Net profits on the sales came in at £0.5m – which the company claimed was ‘in line with the current economic climate, and one that was level with the figure for the corresponding period last year.

The results reflected the fact that the mainstay UK market has been experiencing difficulties this year, in line with tough economic conditions and falling consumer spend.

Commodity prices hit profits

“In addition to a relatively weak consumer picture, we have, in line with others in the industry, been affected by significant increases in the costs of raw materials and components”​ said Ian Mackinnon, Swallowfield Chief Executive.

The company said it has tried to counteract the effect of both rising costs and falling consumer demand by focusing on the generation of new business, while also passing on some of the increased costs to its customers.

In recent months hikes in energy costs, combined with pressures on global suppy from emerging markets, have hit raw material manufacturers worldwide. This effect has moved up the supply chain of nearly all manufacturing industries, hitting ingredients suppliers, packaging providers and ultimately manufacturers of finished goods in the personal care and cosmetic sector.

Focus on cost cutting measures

“In addition to increasing revenue, tight cost control remains an important part of our strategy for continuously improving shareholder value,”​ Mackinnon added.

“Total overheads were 23.5 per cent of sales - a significant improvement over the 25.3 per cent reported for the same period last year despite the inflationary background.”

Given the lack of visibility in the UK market, the company said that it does not expect any significant increase in its performance over the course of the next six months, although it did state it remained ‘cautiously positive’ that results would be in line with forecasts made at the beginning of the financial year.

Swallow expands services and geographic reach

Three years ago Swallowfield expanded its range of services to include market analysis, formulation, design and packaging developments as well as product manufacturing, sourcing and logistics – making it a full service contract manufacturer and service provider.

In recent years the company has also built up a presence in emerging markets having opened a production plant in the Czech Republic and also forging joint manufacturing venture in China.

Earlier this week the company announced the appointment of two new non-executive directors to its business.

Martin Hagen and Richard Organ have both been appointed to director positions, charged with forming business strategies, as well as addressing issues such as performance, resources and standards of conduct throughout the group.

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