AGA Rangemaster, the maker of upmarket cookers and kitchen appliances, is looking to overseas markets for growth after weakness in established regions pulled revenues lower in the first half.
As such, the group decided not to pay an interim dividend; it paid shareholders 0.8p per share at the half-year stage in 2011. AGA said that its decision was part of the agreement with the trustee of the its main pension scheme to restructure the financing arrangement for the scheme through to the end of 2015. "The aim is to provide medium-term clarity and stability," the firm said.
The group, which had already announced last month that both revenues and profits would be lower year-on-year, reported revenues from continuing operations of £119.2m in the six months to June 30th, down slightly from £121.4m the year before. AGA said that the initial signs of market improvements seen in the first quarter were not sustained resulting in a further period of weak demand.
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Profit before tax slumped from £4.2m to £1.6m, while basic earnings per share fell from 4.3p to 1.9p.
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The group said that the established UK and Irish markets are likely to remain weak "for some time", and the onus is on new markets like China and on raising market penetration in geographies like North America "where our market position is not yet fully developed".
Nevertheless, the firm said that there was no shift in the overall geographical balance of the business in the first half: UK sales contributed 63% of group revenues; Europe 22% and the rest of the world 15%.
Revenues for the full year are expected to show growth despite the usual quiet summer period. The group said it is "galvanised or a strong autumn sales push with lines like AGA Total Control and a resurgent Fired Earth in the forefront even if markets remain subdued."
Chief Executive William McGrath said: "The continued challenges in the economy and lack of activity in the property market have clearly had an impact on demand in the first half as customers delay purchasing big ticket items. However, our investment in innovation, efficiency drive and great product offer ensures that we are well placed to respond when the market recovers. Our recent collaboration with the Chinese group Vatti demonstrates the opportunities ahead to enter into new markets."
The group announced in July that it had entered into a collaboration agreement with gas burner appliance firm Vatti, which will see AGA, La Cornue and Rangemaster products sold in China, rolling out to 500 shops over the next two years.
Shares dropped over 10% in early trading on Friday.
