Westcountry based cosmetics and toiletries manufacturer Swallowfield is back in the black, after announcing a return to profitability in its half-yearly results published today.
AIM-listed Swallowfield plc, which is headquartered in Wellington, has posted an operating profit of £130,000 compared to operating losses of £550,000 for its financial year to June.
The company, which also has a factory in Bideford and employs around 400 Westcountry staff, includes many of the world’s leading brands among its clients for whom it develops and manufactures personal care and beauty products.
After posting £1.57 million profits for 2011/ 2012, the business was impacted by three of its leading clients switching to manufacture more of their products in house.
Two major clients had accounted for almost a quarter of Swallowfield’s business, while a further five have accounted for 47% of orders.
In March last year, then-chief executive Ian Mackinnon announced that the company was looking at how it could rebalance its business away from its dependence upon a small number of key clients, while also looking at developing new products and attracting a more diverse customer base.
The company said that its Westcountry workforce was downsized by a ‘handful’ of staff, as it began its restructuring.
Mr Mackinnon stepped down from his role to be replaced by Chris How, who joined from PZ Cussons in July.
He announced in September that the company had already progressed through its cost-savings exercises, while the development of new product lines and client leads had generated 21% in sales growth.
Its refocused strategy builds on its core offer of developing and making specific product categories including aerosols, hair styling, cosmetic pencils and fragrances.
While Swallowfield – which also has manufacturing operations in the Czech Republic and in China – saw its half yearly revenues remain broadly flat at £25.4 million, its underlying sales increased by 8%.
There was strong growth in direct exports, which now represent 35% of turnover.
Swallowfield said that a number of customer wins with launches scheduled in the second half are likely to positively impact future performance.
Swallowfield has also reduced its net debt to £4.6 million from £5.5 million and secured new banking facilities with HSBC.
Chris How said: “The strong action taken in re-aligning our cost base and gaining new business has helped us to create momentum in the business and given us a more solid platform from which to build.
“This combined with our growth strategy, which will see us focus on the areas where we are particularly strong and have a proven track record, has already started to yield positive results and we are confident this trend will continue into the second half of the year.”