Pittards has published its second profit warning in three months after slowing global economic growth and events such as the Paris attacks suppressed demand for the leather manufacturer’s products.
The 190-year-old company, based in Yeovil, Somerset, said in a trading update that it expected to make a reasonable profit in the year that ends next week but that the figure would be materially below forecasts. The company did not give figures for market expectations.
Pittards said in September that demand for its goods had weakened because of slower growth in emerging markets such as Russia and China and wider economic uncertainty. It said then that annual profit would be less than forecast and the trend has continued amid turbulent world events with a further impact on profits.
Pittards employs 220 people in Yeovil and 1,700 in Ethiopia, producing leather mainly for sale to makers of upmarket gloves, bags and similar items. It sells to brands such as Jack Wills and the golfwear maker Footjoy and also supplies the British armed forces and other armies.
Reg Hankey, Pittards’ chief executive, said: “If you look at the Russian situation and Chinese demand and, post-Paris, consumers in Europe being more cautious and turbulence in the Middle East, it makes most of the big brands a little bit more cautious and that results in slightly weaker demand for everything.”
In the past 10 years, Pittards has started making its own branded goods and the company opened its first shop, in Somerset, this year. But with more than 90% of sales from exports it is exposed to global events and trends.
Pittards’ shares fell as much as 9% and were down 8.6% to 85p in late morning trading. They have dropped by more than a third since the company’s previous profit warning in September.
UK manufacturers have reported weakening overseas demand for their goods caused by the weaker global economy and the strength of the pound. A CBI survey last month showed that manufacturers expected output to fall in the coming three months as a downturn in China and other export markets hit demand.
Hankey said: “UK manufacturing companies all seem to be saying something similar: that order books have slowed up in the last six months or so and we are no different. But the fundamentals of what we are doing are sound.”
He said the pound’s recent fall against the dollar would help Pittards because more than 70% of the company’s products are invoiced in dollars. Lower raw material prices are starting to boost margins, the company added.
Hankey said Pittards would tighten up on costs but that jobs were not at risk and the company is recruiting new employees in the UK.
