Carclo plc Year-End Trading Update (4125W)
17 April 2019 - 4:00PM
UK Regulatory
TIDMCAR
RNS Number : 4125W
Carclo plc
17 April 2019
17 April 2019
Carclo plc ("Carclo" or the "Group")
Year-End Trading Update
Carclo plc ("Carclo" or the "Group"), a global manufacturer of
fine tolerance injection moulded plastic parts mainly for the
medical, automotive lighting and optics markets, issues this
trading update for the year ended 31 March 2019 ahead of the Group
announcing its full year results in June.
The Technical Plastics and Aerospace Divisions performed as
anticipated in the year, with the second half seeing a
much-improved performance from the Technical Plastics Division.
This reflects the growing success of the ongoing operational
improvement programme and controlled growth in volumes. A programme
commenced just before the year-end to reduce the footprint of the
Technical Plastics facility in the Czech Republic to further
improve the site's future profitability. Overall, both the
Technical Plastics and Aerospace Division saw year-on-year
improvements in operating profits, with the Aerospace Division
significantly ahead.
In Wipac, the main operating business in the Group's LED
Technologies Division, production volumes have begun to increase in
recent weeks although customer backlogs have remained largely
unchanged as customer demand has risen, partly for Brexit related
safety stock reasons. With some key personnel changes having been
made in the past three months and a range of operational
initiatives subsequently implemented, the Board is confident of
further progress being made in improving output in the near-term.
Given that a number of new mid-volume platforms go into production
over the coming months and years, the revenue outlook for the
business remains strong, with the opportunities and challenges this
brings.
However, although progress was made in increasing production
output, the costs of scrap, freight and production labour remained
at higher than expected levels as an unprecedented number of new
programmes were launched into the previously reported unstable
manufacturing environment. This situation, combined with lower
development and tooling revenue as fewer new programmes were
awarded, a risk highlighted in the Group's statement on 11 January
2019, resulted in the profits for Wipac, and consequently the
Group, falling below the Board's expectations for the year.
Exceptional costs associated with reorganising the Wipac
business and restructuring the Czech Technical Plastics facility
were broadly as anticipated in the range of GBP1.5m to GBP2.0m, of
which around GBP0.4m was non-cash in nature. In addition,
exceptional costs of around GBP3.0m associated with the
equalisation of guaranteed minimum pensions ("GMP") are to be
charged in the year. Work to determine the effect of the reduced
profitability on the carrying value of goodwill will be finalised
as part of the year end audit.
The Group's organisational structure has been simplified with
the recently appointed interim COO role quickly being eliminated in
order to provide greater clarity and swifter decision making. This
move is seeing benefits with the local, recently enhanced, Wipac
team leading the business with renewed focus and unified direction.
Customers remain broadly supportive of our actions and, in a number
of cases, are providing expert on-site assistance. In addition,
discussions are ongoing for the earlier than planned customer
reimbursement of monies incurred by Wipac for the design and
development of future production programmes.
Group net debt at 31 March 2019 was in line with expectations,
at slightly above the level at the half year. Given the ongoing
discussions with customers referred to above, the net debt to
EBITDA banking covenant test at 31 March 2019 was deferred by the
bank for one month in advance of the year-end. The Group is
financed through an overdraft facility and a GBP30m term loan
maturing in March 2020, which will require refinancing in the
coming months.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
Enquiries:
Carclo plc 01924 268040
Richard Ottaway, Company Secretary
FTI Consulting 020 3727 1340
Nick Hasell / Susanne Yule
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END
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