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Heat is on to boost Aga profits; in association with RBS.

UPMARKET oven firm Aga Foodservice has outlined plans to boost sales of its iconic ovens and cut costs after reporting flat profits growth last year.

The firm reported pre-tax profits of pounds 27.6m, up 0.4% on 2006, but said it would look to trim costs by pounds 3m and launch a marketing push as it targets a return on sales "closer to 12%". The figure in 2007 was 10.6%.

It said jobs were not set to be affected by the cost cuts, with savings largely expected through changes to product specification and manufacturing.

Aga also announced it was changing its name to Aga Rangemaster after the sale of its Foodservice arm for pounds 265m last year.

The group posted a 7% rise in sales of its Rangemaster oven to 76,000, but said sales of its Aga, Rayburn and Stanley ranges finished the year down 2% at 19,600 after a slower second half.

The Birmingham-based company said it was spending pounds 3.5m on marketing for its Aga range of cast-iron ovens this year, up 20% on 2007.

The push is being led by a "Love Aga" campaign, which the company hopes will boost sales amid a housing and consumer spending slowdown.

William McGrath, chief executive of Aga Foodservice, said the premium end of the market was likely to hold up well.

He said it would be a tough year for the market, but hoped the revamp plans would make 2008 a "better year" for the group.

Aga is also hoping to turn around its tiles and interiors chain Fired Earth and furniture business Grange, which failed to produce a profit last year.

It said Fired Earth orders in the first 10 weeks of 2008 were "encouragingly" up nearly 10%, while Rangemaster had seen a 5% lift in order intake so far.

Analysts at Panmure Gordon said Aga was "clinging on". Oliver Wynne-James said the "top line and cash flow disappointments" of the smaller businesses in the group may be saved this year by its cost cutting and marketing plans outlined.

Aga makes its flagship Aga ovens at a manufacturing operation at Coalbrookdale, near Telford, while Rangemaster products are made in Leamington Spa.

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NEW STRATEGY William McGrath of Aga Foodservice.
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Article Type:Financial report
Date:Mar 15, 2008
Words:376
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