Headwinds offset brand relaunch benefits, for now

Ultimate Products announced a trading update today which prompts us to reduce our sales and profit expectations for FY2025. Furthermore, caution about a recent fall in order books causes us to reduce sales numbers for FY2026. However, we note that management highlights a more intense focus on its sales function and both Salter and Beldray are in the relatively early stages of their re-brands.

Despite progress in headline sales, which increased by 4% from a year earlier between February and May 2025, ULTP expects FY2025 H2 revenues to be flat and thus down for the year in FY2025. The company experienced some deferral in orders to the tune of £4m. Meanwhile, gross margins contracted due to some shifts in both product category and retail channel mix. This explains expectations of a flat EBITDA number in FY2025 H2 and a full year decline. It is clear that overall market trading conditions in homewares remain tough.

We continue to argue that ULTP’s valuation should reflect the embedded value of its critical owned brands – i.e. Salter (the UK’s oldest houseware brand) and Beldray. Hence, we consider a fair value for the company’s shares at around a 1.0x EV/sales ratio. Based on FY2026, this implies a cut to our fair value from 165p to 135p, which would still be well above the current share price.