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Ed’s view: Fuzzy financials

CN editor pic 2019 crop

This time of year seems to be a bit of a bonanza for companies’ financial results, with those on both sides of the distributor and supplier fence recently posting their latest incomes.

And the latest crop of reports points towards a distinctly mixed picture in terms of the health of the UK catering equipment sector. Even the all-conquering Nisbets has seen its growth slowing down. After consistently recording double digit increases for the past several years, in 2018 the brakes were applied somewhat with ‘only’ a 5% increase. Of course that 5% still represents nearly £18m – more than many sector firms’ entire revenue – as the turnover total climbed to £398.1m.

A further indication of Nisbets’ slowdown was a 26% drop in its operating profit, to £28.1m. The firm’s directors pinned this deceleration on challenging trading conditions due to Brexit uncertainty. In fact, the management envisages that these difficult trading conditions will continue until the outcome of the Brexit negotiations becomes clearer. At this point, I’d suggest that could be a Waiting for Godot situation and we’ll all be in our dotage before any clarity is realised.

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So what then does this signify for the sector performance as a whole, and indicators going forwards? Well in smaller kitchen design houses we have recently seen contrasting fortunes. Thanks to some delayed projects, Kent-based Hallmark Kitchens turnover fell by 18% to £6.4m in 2018, from the 2017 financial year’s £7.8m. Operating profit also slipped to a loss of £56k, 142% down on 2017’s £132k profit. However, this was due to programme slippage on a number of large contracts which are now coming to fruition, so the distributor is expecting to bounce back with this year’s figures.

On the other hand, Fulcrum Commercial Kitchens had a banner year, expanding by almost a third in 2018/19, although starting from a lower base. But posting a record turnover is nothing to be sniffed at, with the Wiltshire-based company recording £2.17m for the year ending 31 January 2019.

Could it be then that the gap between the larger and smaller distributors is narrowing? The annual reports for 2019 should provide a significant pointer towards discovering an answer to that question.

For the suppliers among us, there was positive to flat growth. In the smallwares sector, Nevilles smashed through the £20m turnover barrier, recording a turnover of £21.1m – a 7% increase on 2017’s £19.6m. Whereas display specialist Counterline saw a slower increase of 2%, from £10.3 to £10.5m for the year ended 30 June 2018.

I have heard many different views on how UK catering equipment businesses are performing, ranging from dire to outstanding, so I think the only thing we can say right now is that there is no discernible trend across the board.

Tags : Editor's Viewfinancial resultsfinancialsopinion
Clare Nicholls

The author Clare Nicholls

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