Aga Climbs as U.K. Housing Recovery Increases Sales of Stoves
Aga Rangemaster Group Plc (AGA) rose to the highest since 2008 after the British maker of cast-iron stoves owned by celebrities from Madonna to Prince Charles predicted improved trading this year, helped by new models and a housing recovery.
Sales of AGA kitchen stoves increased 10 percent by volume in 2013 driven by electric cookers, which represent more than two-thirds of the total, the Warwickshire, England-based company said in a statement today. The shares gained as much as 8.7 percent in London trading.
“The tide turning in the housing market proved pivotal and we will benefit as the number of house moves increase,” Chief Executive Officer William McGrath said in today’s statement. “With new products and a widened targeted customer base, we are confident of good progress in the year.”
AGA, which produces its stoves in the English Midlands and assembles them by hand, said it will attract new customers with cookers that can be controlled via a smartphone. AGA also recently received accreditation to begin selling Rangemaster products in China. The modern AGA “can go from being a successful niche U.K. brand to this more global product,” McGrath said on Bloomberg TV today.
AGA shares rose as much as 15 pence to 188 pence at 11:10 a.m. in London, the highest price since September 2008. The stock has more than doubled in 12 months, valuing the company at 130 million pounds ($218 million).
“Encouragingly, current trading, covering the first two months of the year, has continued to be strong, with group order intake up 6 percent on last year,” analysts at Numis Securities led by Andrew Wade said in a note, as they reiterated an add recommendation today with a price prediction for the shares of 200 pence.
A broadening recovery, government incentives and record-low interest rates have fueled Britain’s property revival, with data this week showing mortgage approvals increased to the most since 2007, while house-price growth accelerated in February to the fastest in almost five years. Aga reduced its workforce by a fifth during the recession.
The company’s operating profit last year rose 26.2 percent to 8.2 million pounds, according to today’s statement. Total revenue increased 2.4 percent to 250.4 million pounds.
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