Sales fall below expectations for plastics company Denroy
The Co Down company behind the world-famous Denman hairbrush has said it has held back on major investment due to Brexit as it reported a slight drop in revenues to £16.4m.
Denroy Group chairman John Rainey said that while pre-tax profits increased marginally to £356,249 for the year to December 31, 2018, sales were below expected levels.
In his chairman's message with the company's accounts, Mr Rainey said: "The group are generally confident about the economic outlook over the next 12 months, however the risk of a 'no-deal' Brexit remains high and it is unclear how significantly this will affect the UK economy.
"Confidence continues to be affected and the group has extended the scheduled start date of a major capital investment until clarity emerges."
Mr Rainey, whose father Max founded the Bangor-based plastics firm, said the Denman brand continued to grow.
However, he said the group had ceased distribution of a number of third-party brands during the year, which he said impacted overall revenues.
The USA remains a key market for the brush brand, with new products planned for release in 2019.
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The chairman's daughter, Victoria Fishman, is a key figure in the US operation.
Mr Rainey also reported a slowdown in Ministry of Defence-related spending, but said the increasing involvement in the aerospace sector attracted a number of new customers.
Denroy is one of the companies involved in the Causeway Aero Group, which has brought a number of Northern Ireland firms together to bid for bigger aerospace contracts.
Denroy Plastics Ltd initially loaned £71,000 to Causeway, subsequently converting it to equity. It now has a 21.4% stake in the Causeway Aero Group.
Mr Rainey said: "The company has continued to focus on development of the aerospace sector with a number of new customers engaged during 2018, which are expected to become significant trading partners in the years ahead."
Causeway Aero deals included a large contract with Bombardier Transportation linked to its rail division.
Overall, Denroy reported a decrease in gross margins from 38% in 2017 to 36% last year, which it largely blamed on increased wage costs. The company report indicated that Denroy's workforce decreased from 212 to 200 over the year, but its wage bill rose from £5.7m to £5.8m.
Among the challenges identified were the rising price of raw materials and the impact of introducing the living wage.
Denroy received £222,086 in Government grant aid to assist research and development.
The group said it was unclear what impact changes to import and export tariffs as a result of Brexit could have on its operation. As a result, it has embarked on a Brexit risk assessment and developed contingency plans largely linked to its supply chain.
"Further contingency plans will be drafted to mitigate risks and challenges as the impact of Brexit becomes clear," it said.
In April, Denroy confirmed Kevin McNamee had taken the role of chief executive, with Mr Rainey expected to step back from the direct running of operations.