Sprue Aegis sees operating profit in line with market views

Sprue Aegis said on Tuesday that operating profit for the year to the end of December 2017 is expected to be in line with market views at around £4.5m, up from £2.1m the year before, albeit against lower sales, thanks in part to a “significant” improvement in gross margin and pro-active management of the cost base.

Meanwhile, sales at the AIM-listed smoke alarm maker are expected to slip to £54.3m from £57.1m in 2016.

Sprue said 2017 was a “strategically pivotal” year, with the transition of its own product manufacturing away from Newell Brands to Flex in Poland and the sourcing of replacements to the BRK products from a leading Far East based supplier.

“The board is pleased with the progress made and expects both production and the sourcing of alternative products to commence in April this year.”

Executive chairman Graham Whitworth said: "2017 saw a significant improvement in gross margin with operating profit more than doubling to £4.5m, albeit against a backdrop of lower sales than anticipated.

“The transition of manufacturing to Flex in Poland and the sourcing of products from a leading Far East supplier are on track. We are excited about becoming independent from Newell Brands from 31 March 2018 and believe that 2018 is set to be a transformational year for the group."

At 1305 GMT, the shares were down 4.2% to 201.10p.