AGA Rangemaster revenue dips but operating profit rises

Cooker maker AGA Rangemaster reported a slight fall in revenue but that didn't stop operating profits soaring during the year ended December 31st.

Revenue dropped from £259.1m to £250.9m, with operating costs lower at £244.8m (2010: £254m). Second half revenues of £129.5m were down 4.5% year-on-year, compared with the first half when revenues fell 1.6% to £121.4m. The proportion of total revenues from outside the UK was flat at 37%.

The operating profit for the year was £6.1m, up from the £5.1m reported in 2010, as the group benefitted more fully from the operational efficiencies implemented in 2008 to 2010.

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"The product introductions and strengthened business processes enabled us to improve margins and provide a continuing optimism that the groundwork is in place to restore profits to levels achieved prior to the economic downturn," the firm said.

"We went into 2012 expecting markets to remain tough and we have already undertaken further steps to improve efficiencies and lower the cost base, building on programmes of the last four years. We now have a single set of focused business processes across the UK manufacturing units."

Cash dropped from £51.7m to £48.1m, slightly lower than expected. The final dividend is 1.1p, bringing the total dividend for the year to 1.9p compared with 1.7p the previous year.

Merchant Securities said that the benefits of operational restructing have improved margins, which in turn has driven adjusted profits before tax to increase by 1.1x £7.6m on a 3.2% decline in revenues, in line with expectations. The broker believes the stock is undervalued and reiterated its buy rating and 102p target price.

The share price fell 0.29% to 86.00p.

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