Straight ahead to a rosy future as profits return

The Leeds-based group increased turnover by 11 per cent to 28.3m and recorded a pre-tax profit of 1.6m, compared to a loss of 1m the previous year.

New products and expansion into new markets helped revenue in the group's dominant trade business rise by 17 per cent to 27.1m.

The trade arm, which supplies products in bulk to local authorities, utilities, the waste industry, retailers and other businesses, saw gross margins rise from 18 to 19 per cent.

The retail arm, which supplies direct to consumer, saw revenue slide from 2.3m to 1.2m, after the group decided to focus on strategic products and clients.

But losses in retail narrowed from 500,000 to 94,000 as Straight reduced home delivery costs through the creation of an in-house controlled carrier network.

The group expects the retail division to be in profit this year.

James Newman, chairman of Straight, described the results as "excellent" and said the group transformed its performance in 2009.

He added:"Straight continues to lead in all of its core markets and is making good progress in broadening both its product and customer base."

James Mellor, finance director, said two strategic reviews, a redundancy programme to reduce staff numbers from 62 to 38 and a refocusing of the business turned around the group's operating margins.

Jonathan Straight, chief executive, said: "In March 2009, we forecast a successful year. I am pleased to say that the many difficult decisions taken late in 2008 proved to be the correct ones and we have a reinvigorated business.

"The outlook for 2010 is positive. We had a record order book at the start of the year and a strong pace of order intake has continued since January.

"We are the leading player in many of our markets and where we do not lead we have the resources and capability to do so in the future."

Straight paid 400,000 for Harcostar Garden Products, a long established premium brand consisting of water butts, compost bins, watering cans and accessories, last February in a move which gave the group new distribution channels for the business in the UK and in Europe.

The integration is now complete and the investment recouped through profit contribution, said the group.

The Aim-listed company bought the business and some assets of Helesi's UK manufacturing operations for 1.65m last month, which provides Straight with its own proprietary wheelie bin range.

Mr Straight described the deal as "a key milestone in the development of the group. While we have sold wheeled bins in significant numbers over the past five years, we have never had a proprietary product to offer."

The group said it is working on new acquisition opportunities in order to strengthen and protect its position as market leader in its core sectors.

It added: "The group's strategy of organic growth as well as selective acquisitions will continue into 2010, supported by a strong trading environment in the UK, new overseas market opportunities and strong cash generation."

Straight, which outsources its manufacturing requirements, has established overseas sales channels and is now producing and selling water butts in Australia and North America.

The group has net assets of 9.7m, up from 8.9m the previous year ending December 2009.

It is proposing a final dividend of 0.7p per share, which gives a total dividend for the year of 3.5p.

Shares closed last night at 96.5p, a rise of 1.5p.

Weathering the storm

While Straight's future may be "looking rosy", the wider economic picture is less certain, said Jonathan Straight, the entrepreneur behind the Aim-listed Leeds company.

He added: "I think the economy may well run into further problems. I don't see that impacting on what we are doing.

"We were not particularly affected last time and I would think that if there are more problems at a macro-level we will weather them as we did first time around."