Pittards, a major U.K.-based supplier of leather to the sporting goods industry, had a mixed year in 2018, with revenues falling by 5.9 percent from 2017 to 28.5 million pounds sterling (€33.1m-$37.2m). The management said it faced a difficult environment, including a globally subdued economic climate, with overall weaker demand for shoe leather. It also pointed to the impact of Brexit and general trading conditions in Europe, as well as tensions between the U.S. and China.
The company's pre-tax profit remained flat at £400,000 (€464,700-$522,200), but Ebitda improved by 12.5 percent to £1.8 million (€2.1m-$2.3m) and the gross margin jumped by 2 percentage points to 25 percent, as the company benefited from lower raw material prices.
Looking back at 2018, the management talked about the good progress made in implementing the group's stated objectives. It noted that Pittards is well positioned for growth with clear priorities, a stable financial base and a positive outlook on near-term opportunities.
However, it recognized that the company needs to evolve, as most of its current core customers operate in niche market sectors where growth opportunities are limited. In order to build medium- and long-term growth into the business, the management said it needs to expand into new market sectors and has identified two new ones: whole hide interiors and large footwear brands. It said the hide business' stock typically turns faster than skins, and therefore will result in a more balanced product portfolio, alongside a reduction in inventories.
Last year, the company completed the reshaping of its manufacturing operations into two divisions – one for the U.K. and the other for Ethiopia – each with its own reporting and management structure.
In 2017, the group expanded its operations in Ethiopia by adding a new shoe factory to its existing tannery and glove-making facilities. The new facility employs 70 people to hand-stitch shoes for a special footwear brand, Soul of Africa. The opening of the new shoe factory took Pittards' total workforce in Ethiopia up to 1,500. Some 90 percent of the company's revenues were outside of the U.K. in 2018.
For its Ethiopian business, the strategy is to focus on the development of manufacturing for finished products, in particular shoes and gloves. The management said the division has expanded its product offering and volumes, establishing itself as a reliable resource for these finished products.