Plates and saucers are flying at pottery firm Portmeirion (LSE: PMP). The firm is listed on Aim and is now leading a renaissance for Britain's once-dominant ceramics industry, reporting seven consecutive years of record growth.
Portmeirion, founded in 1960 and named after the idyllic Welsh village, bought two of the UK's best-known ceramics brands, Spode and Royal Worcester, in the downturn of 2009. Since then the shares have taken off, as consumers in America and Asia have gone crazy for its growing range of dainty patterned ceramics.
Portmeirion makes porcelain, bone china and earthenware goods at its factory in Stoke-on-Trent. It recently spent £1.5m on a new kiln and is turning out 170,000 pieces per week, double its production levels in 2009. It has a showroom on Madison Avenue in New York and sells more in America than in the UK.
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The company's floral designs are also a big hit in Asia, with sales rocketing in India and China. South Korea is another big buyer, accounting for a quarter of the business. Total revenue jumped 12% last year to £69m, with full-year profit of £8.6m. Online orders are growing even more rapidly, up 27% last year to £2.5m. And sales for the current year are already up, according to a recent statement.
Portmeirion makes 80% of its pieces in England, but some are also made in China. That caused problems in 2013, when the EU introduced swingeing new anti-dumping taxes on ceramics imported from the country, forcing Portmeirion to shift part of its production to Bangladesh. Despite the added cost of more than £400,000, it still ended the year with a record profit.English bric-a-brac is in right now (think Downton Abbey and The Great British Bake Off).
That could change and consumers in the US and Korea might follow a different fad, stalling Portmeirion's growth rate. Its shares are trading at 16 times earnings and a 2.7% dividend yield, pricing in much of the good news.
But on both counts, Portmeirion is still cheaper than Churchill China, its closest listed competitor, which turns over less each year. Portmeirion's profit margins are higher and it is also debt-free, with £11.1m in cash on the balance sheet. It is difficult to find a crack in the company.
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