The phased reopening of Walker Greenbank’s two manufacturing facilities (both in the UK) is underway with Standfast & Barracks already operational and Anstey restarting this week. The company’s business model is such that near-term activity levels can be rebuilt gradually. It may also support new business development in the UK in due course compared to overseas supply sources. No new financial information was provided ahead of the company’s scheduled FY20 results announcement on 30 June, at which point activity levels during FY21 to date should also be disclosed. Our estimates remain suspended at this time.
The easing of UK government lockdown restrictions, together with customer orders, has permitted Walker Greenbank’s production facilities to reopen. Standfast & Barracks (fabric printing) has restarted printing of third-party branded orders and around half of the usual workforce will be progressively engaged to carry this out. Standfast has a larger digital printing capability (over 50% of sales), which may facilitate a faster restart, although it is not specified what proportion is via this process. Our initial read on this is that sales demand – albeit at unspecified lower levels – has reduced carried inventory levels such that a relatively low-risk production restart is warranted against orders on hand. Print runs at Anstey (wallpaper printing) are also starting this week, beginning with internal Brand print runs for Zoffany’s new Palladio collection ahead of launch later this year. Typically, around 60% of gross Manufacturing division revenues are to external customers (the other c 40% to support internal Brand division sales).
Walker Greenbank’s oft-stated business model benefits – scale, high-quality, UKbased manufacturing facilities, well-known brands all backed by carried inventory – appear to have been reinforced during the coronavirus disruption. Sales have continued to be serviced and the discrete nature of printing operations means that the manufacturing restart can be done in phases. Investment in digital printing capability also looks to be beneficial. Caution will continue to be the order of the day in the near term, managing costs and cash inflows carefully during the staff and inventory rebuild period. UK government furlough scheme cash receipts began in April, although the company has now clearly started to reduce the number of employees required to be registered here. Further out, with the benefits of nearshoring emphasised in current market conditions (especially customer access and shorter supply chain) could stimulate new business development in the UK market.