Airea upbeat thanks to demand from affluent customers

The Wakefield-based company, whose carpets are popular with rock stars and footballers, said the trading environment remains challenging, particularly in the residential sector.

It added that consumer confidence has weakened in the face of the increasing tax burden, Government cuts and fears over job security.

Chief executive Neil Rylance said: “We have yet to see how changes in Government expenditure will impact demand for floor-coverings in the public sector markets that we serve.

“Increasing raw material prices resulting from commodity price inflation only add to the challenges we face, but so far we have been able to pass on appropriate price increases to the market.”

He added that major progress has been made to reduce waste and distribution costs.

“Our residential product offer is well placed to serve the mid to upper end of the market, where consumer confidence has proved most resilient,” he said. Increases in selling prices have lagged behind raw material prices, but this will be corrected in the second half as January price increases filter through.

Wakefield Council is looking at proposals to turn the group’s Victoria Mills property in Ossett into a housing development.

A decision is expected next year and is part of the group’s strategic review of its property portfolio and manufacturing footprint.

Airea said it would be imprudent to make a dividend payment at the interim stage although it intends to restore the dividend at “the earliest opportunity”.

In the six months to December 31, Airea’s pre-tax profits fell from £520,000 to £190,000, which the group said was “pleasing” given the depressed market condi- tions.

Sales fell from £16.7m to £15.1m over the six-month period.

The group said it faces a volatile trading environment with a mix of erratic demand and raw material inflation.

Residential sector sales were hit by the weak high street performance in December, but the group said it is encouraged by sales of new products and a new contract with a major multiple retailer.