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Tanners and leather product makers, Pittards PLC shares were down in early trade on September 18 as the group said its profit and revenue in the first half dropped as it became the latest company to report a negative material impact from the strength of sterling.
Shares in the company, a leather and leather-products supplier, were down 7.8% in early trade, making it one of the worst performers on the AIM All-Share.
Pretax profit for the company in the six months to June 30 was £0.3 million (US$0.5 million), down from the £1 million (US$1.6 million) posted a year earlier, as revenue for the company fell to £17.4 million (US$28.6 million) from £18.4 million (US$30.3 million) last year.
Pittards said the strength of sterling in the first half of the year had a material impact on the company as a large proportion of its sales are invoiced in dollars and euros. It said underlying sales in foreign currencies rose in the period and, if dollar and euro exchange rates had been in line with the same period last year, revenue in the period would have inched up to £18.7 million (US$30.8 million).
The group said improved sales for its industrial and garment manufacturing arm in Ethiopia were offset in the period by a shortfall in demand for dress glove leathers, hit by the mild winter weather. It also saw a shortfall in military leather, where draw downs from existing contracts proved slow in the half year.
The company said it has recently formed a consumer product arm for the UK market and has won sterling-denominated contracts from a number of British brands. It also said its relationship with key customer Footjoy has proved fruitful, with particular success from the DNA golf shoe, which uses Pittards Chromoskin leather.
"Although the strength of sterling was a major challenge in the first half of the year it has moderated in the last couple of months, and we believe there are good opportunities for growth. With a good product base and tight control of costs, we look forward to a stronger second half result," said Pittards Chairman Stephen Boyd.
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