Denby Pottery is on the brink of administration as rising energy costs impact its operations. The company, a significant gas user, faces challenges stemming from increased prices following the conflict in the Middle East. Denby is currently owned by Hilco Capital, co-founded by Paul McGowan.
Current Situation of Denby Pottery
This week, the UK High Court announced intentions for Denby Holdings and its associated firms, including Denby Retail, to enter administration.
Reasons Behind Administration
- High energy costs linked to geopolitical issues.
- Substantial historical debt of £72 million.
- Underfunded pension scheme and high fixed costs.
Entering administration is a process aimed at rescuing the business from potential liquidation.
Financial Performance Overview
Denby’s financial results have fluctuated significantly. In 2021, the company reported an operating profit of £2.7 million and maintained stable revenue of approximately £56 million. However, the situation deteriorated in 2023, with an operating loss of £3 million.
Revenue and Losses
- 2022: £295,000 operating profit, revenue of £56 million.
- 2023: £3 million operating loss, revenue dropped to £52.1 million.
- 2024: Expected operating loss of £4 million, revenue fell to £45.4 million.
Market Challenges
The business has encountered “another challenging year” as consumer confidence wanes across major markets. Directors indicated that inflationary pressures and decreased demand severely affected operations. Despite the setbacks, Denby continues to emphasize its ‘Made in England’ stoneware, appealing to international consumers.
Operational Adjustments
Denby has taken measures to adapt to the economic environment. The volume of products manufactured in 2024 decreased by 6.6%, and energy consumption fell by 9.3% compared to the previous year.
Energy Usage Insights
In 2024, Denby utilized 35.8 million kWh of gas, down from 38.7 million kWh in 2023. This figure represents significant energy use, typical for large manufacturing businesses. The firm continues to focus on energy conservation strategies amidst falling production levels.
Conclusion
As Denby Pottery faces a precarious situation, the company seeks to navigate its financial difficulties while retaining its manufacturing base in the UK. Future developments in the administration process will determine the possibility of recovery and stability for the historic pottery maker.
