It’s likely that soaring energy costs since the crisis in the Middle East started have played a role in the decision. Loss-making Denby is a big user of gas, the price of which has shot up since the start of the US and Israeli action against Iran.
Denby is owned by Hilco Capital, the private equity business co-founded by Northern Ireland businessman Paul McGowan. A majority stake in Hilco Global, which owns Hilco Capital, was acquired last year by Orix.
The High Court in the UK was told this week of the intention to appoint an administrator to Denby Holdings and a number of related firms including Denby Retail. Entering administration is an effort to save a business to avoid it going into liquidation.
Hilco Capital and Denby have been asked for comment.
It’s the second time in 15 years that the Denby business has faced turmoil. It was bought in 2010 by Hilco and had previously also been owned by a private equity business.
Hilco said the pottery maker had become overleveraged, with a £72m (€83m) historic debt burden, a substantially underfunded final salary pension scheme and a high fixed cost base.
But the business has seen mixed fortunes in recent years.
Accounts for Denby Holdings show that it made a £295,000 operating profit in 2022 and £2.7m in 2021. Its revenue was stable in both those years at about £56m.
But in 2023 it made a £3m operating loss, and a £4m loss in 2024. Its revenue also tumbled from £52.1m in 2023 to £45.4m in 2024.
The group said that 2024 had been “another challenging year”, with a lack of consumer confidence in all major markets leading to reduced demand.
“Inflationary pressure on costs and the impact of reduced demand on the efficient operation of the production facility compounded the sales deficit, albeit these impacts were partly offset by reduction in discretionary spend, deferral of non-discretionary spend and targeted cost reduction actions,” noted directors in the latest set of publicly available accounts.
They added: “The business continued to adopt a pragmatic and flexible approach and maintain a diverse business base supported by a desirable product range anchored on ‘Made in England’ stoneware, but the market pressures led to a loss after taxation of £5m in these difficult conditions.”
The amount of product manufactured by Denby in 2024 fell 6.6pc, while it also used 9.3pc less energy that year.
“Continued employee engagement on process and buildings energy conservation have helped drive down overall energy consumption as lower production volumes still demand a high minimum energy requirement,” it noted.
The nature of the manufacturing process for pottery necessitates high temperatures and results in high gas usage.
Denby used 35.8 million kWh of gas in 2024, compared to 38.7 million in 2023. That’s significantly higher than more typical large businesses.
Consumers and businesses across Europe have been left reeling from higher energy prices since the conflict started almost two weeks ago.
Denby has retained its sole manufacturing operation in the UK, citing its ‘Made in England’ tag as a strong selling point for international buyers.
