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(Sharecast News) - Creightons reported broadly stable first-half revenue and improved margins on Wednesday, but said profitability fell as higher labour costs and customer-related disruptions weighed on the bottom line.
The AIM-traded British beauty and wellbeing brand owner and manufacturer posted a 0.5% rise in revenue to 27.22m for the six months ended 30 September, while operating profit declined 14.5% to 1.45m and profit before tax fell 11.1% to 1.49m.
EBITDA was down 10.4% at 2.22m and diluted earnings per share slipped 7.5% to 1.49p.
Net cash more than doubled to 2.86m, helped by tighter working capital management and the full repayment of a term loan.
The group's revenue mix continued to shift towards private label, which management had earmarked as the main growth driver.
Private label sales rose 15.4% to 16.6m, supported by new UK retail customers, category expansion into fragrance and SPF, and faster speed to market on new launches.
Branded revenues edged down 1.5% to 8.7m, a stabilisation after a sharper decline last year, while contract manufacturing revenue halved to 1.9m after a major customer delayed a significant product launch to 2027.
Gross profit margin improved by 70 basis points to 44.7%, reflecting a more favourable product mix, the pruning of lower-margin SKUs, stronger digital sales and operational efficiencies.
Creightons said it had absorbed around 0.4m of additional labour costs in the period from increases in the National Living Wage and National Insurance contributions, partly offset by 0.2m of cost savings from efficiency measures.
Distribution costs fell as a share of revenue, and the company continued to invest around 0.2m in indirect labour to strengthen its sales function and support future branded and private label growth.
The group also highlighted benefits from its move from the main market to AIM in March, which was expected to lower regulatory and advisory costs and free up management time.
Operationally, the company advanced a series of digital and process-improvement projects designed to underpin future growth.
A new warehouse management system went live in June, increasing pick efficiency by 20%, cutting warehouse hours by 15% and improving stock accuracy.
Creightons said it was rolling out paperless production software with real-time performance monitoring, as well as a centralised artwork tool with AI-based proofing to speed new product development.
Targeted investments in manufacturing have reduced changeover times, boosted capacity and lowered labour consumption, while procurement initiatives have secured extended supplier terms and better pricing on high-volume components.
Looking ahead, Creightons said it expected revenue momentum to improve, driven by continued private label expansion, diversification of its brand portfolio and international growth, particularly in the Middle East and Europe.
Management said operational agility and digital transformation will remain key priorities, with further investment planned in manufacturing capacity, data-led production systems and skills to support "fast-follow" brand development and third-party sourced product ranges.
The board did not declare an interim dividend, but pointed to a stronger balance sheet, negative net gearing and improved working capital as providing a platform for long-term growth in the global personal care and beauty markets.
At 1401 GMT, shares in Creightons were down 2.79% at 27.22p.
Reporting by Josh White for Sharecast.com.