Ramsdens lifts profit expectations but warns of hit from flight disruptions on back of fuel shortages
Pawnbroker Ramsdens has lifted its profit expectations on the back of high gold prices, as the company also warned that its foreign currency arm could be hit by flight disruptions over the summer.
Ramsdens said it now expects to post profit before tax of at least £28.5m in the full year, up from a previous market forecast of £24.1m.
The company added that should favourable gold prices continue and summer currency volumes land in line with last year, the figure could reach as high as £31.5m.
It came, however, as the firm warned of “volatile” gold prices on the back of geopolitical and economic uncertainty.
The company added in a statement: “This uncertainty, and recent reports around fuel shortages impacting flights over the summer may also impact international travel and consequently our foreign currency sales.”
The statement comes amid warnings of a jet fuel shortage ahead of the peak holiday season if the Strait of Hormuz does not reopen.
Peter Kenyon, chief executive of Ramsdens, said: "We have had a strong start to the year given the economic back drop with our pawnbroking, jewellery retail and foreign currency exchange services all performing well.
“In addition, we have had an exceptional half year for our purchase of precious metals segment due to the continued benefits of a sustained high gold price and the increased weight being purchased.”
Ramsdens benefitted from gold prices 50 per cent ahead of last year in the first half of the year, with prices currently still up around 40 per cent year-on-year.
This led to the company increasing its weight of gold purchased by 50 per cent year-on-year.
The firm said its jewellery retail revenue was also approximately 25 per cent ahead of the year prior, with gross margins slightly improved.
It added that “strong demand” for pawnbroking loans had continued from the previous year, with record new lending again in March and April.
Ramsdens said its pawnbroking loan book is now approximately £14.1m, an increase of 24 per cent on the September year end position of £11.4m.
The firm’s warning around flight disruption comes after the Government last week introduced a temporary rule change allowing airlines to group together passengers from different flights onto fewer planes as part of plans to save fuel.
Under the rule, passengers could be moved from the service they originally booked to a similar one, to reduce the amount of fuel wasted by flying planes that have not sold out and might have been cancelled.
Consumer group Which? criticised the plan, saying rules should not be “bent in favour of airlines”.
Tim Alderslade, chief executive of Airlines UK, which represents UK-registered carriers, told the Press Association last week that UK airlines “continue to operate normally” adding that they were “not experiencing issues with jet fuel supply”.
He said: “We are planning to take our customers on their well-earned holidays this summer and will always look after them in line with our obligations.