North East furniture company Be Modern has said it is preparing for “another challenging year” despite returning to profit in 2019.
The Jarrow-headquartered firm saw its sales remain relatively flat for the year ending May 11 2019, with turnover coming in at £20.66m.
But despite the flat revenue figures, Be Modern managed to make an operating profit of £170,000 during the period, up from a loss of £51,000 in 2018.
The company specialises in designing and manufacturing household furniture and fireplace products but said that its sales had been hit by “continued cutback in local authority spending in the social housing market”.
Be Modern added that its margin had been negatively impacted because of the above inflation increase in the living wage and the effect this had on wages across the market.
However, despite the increased labour costs the firm managed to lower its cost of sales, distribution costs, and administration costs by a total of £184,000.
The business said it had managed to offset its costs through changes made to its sales mix.
But despite the strong profit figures Be Modern’s chairman Walter Bloodworth said he still expected the current financial year to be a challenging one for the business.
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Speaking in the financial accounts, Mr Bloodworth said: “It is projected that 2020 will be another challenging year for the company. Efforts made over recent years to identify and develop new markets continue to be actively pursued to generate new revenue streams.
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“Whilst turnover for the first half of the 2020 financial year is marginally down on the previous year it is anticipated that this trend will reverse over the remainder of the year as the company has a healthy order book and continues to invest in the launches of new product ranges which should have a positive impact on the group’s performance in the short to medium term.”
During the year Be Modern reduced its headcount by 11 members of staff bringing its total number of employees to 301. This had the effect of reducing the company’s staffing costs from £8.2m to £7.9m.
The accounts also show that the firm’s directors were paid less overall, The total payments to directors came in at £718,000, down from £806,000.