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(Sharecast News) - Ramsdens lifted its full-year profit outlook on Wednesday as it benefits from the surge in the gold price.
The pawnbroking and currency exchange company said that since its announcement on 10 February, it has continued to perform well across its core income streams, benefiting further from "the sustained, very high gold price compared to historic levels in its purchase of precious metals division".
Based on the current geopolitical and economic backdrop, the company believes the gold price could remain elevated throughout the second half of FY26. As a result, profits in the precious metals division would be ahead of its previous expectations, reflecting both the high gold price and increased purchase volumes.
Taking into account the strong trading for the first five months of the year and updated expectations on the outlook for gold, it now expects FY26 pre-tax profit of at least 24m and, if the favourable gold price and trading conditions continue, potentially up to 28m. Previously, market expectations were for pre-tax profit of 21.1m.
Ramsdens noted that the average gold price for the year to date is up 50% on the prior year. The higher gold price is also contributing to an increased weight of gold purchased, which is also around 50% higher.
The company said jewellery retail revenue is about 25% higher year-on-year, while pawnbroking lending was at record levels in February and positive momentum has continued into March. The loan book is now around 13.5m, up 18% on the September year end position.
As far as the currency exchange business is concerned, the total exchanged in the first five months of FY26 was in line with the comparable period a year earlier, with foreign currency commissions down about 5% on the year as customers move online and use currency card sales.
Ramsdens said that while the situation in the Middle East may have an impact on international travel, its primary foreign currency activity is selling euros to customers holidaying in Europe, "which currently appears to be stable".
Chief executive Peter Kenyon said: "Ramsdens continues to perform well across its diversified business model reflecting the strength of our trusted brand, value for money proposition and outstanding team. In addition to underlying progress across the business, we continue to benefit from the high gold price, which is significantly boosting both customer demand and profits within our purchase of precious metals segment."
The company said it was on track to open between eight and 12 new stores this year.
At 0905 GMT, the shares were up 9.9% at 401p.
Russ Mould, investment director at AJ Bell, said: "Surging gold and silver prices are not just good news for the companies which dig the stuff out of the ground. It's also a time to shine for pawnbroker and jeweller Ramsdens - which has delivered a sizeable upgrade to profit guidance.
"It's hard to know just how long the good times will last, but for now Ramsdens is enjoying a golden period. Shareholders will be encouraged to see the company building on a position of strength by continuing to roll out new stores."
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