RM2 International SA Operational Update (0312A)
September 24 2015 - 1:01AM
UK Regulatory
TIDMRM2
RNS Number : 0312A
RM2 International SA
24 September 2015
24 September 2015
RM2 International S.A.
OPERATIONAL UPDATE
RM2 International ("RM2" or the "Company"), the
vertically-integrated innovator in pallet development, manufacture,
supply and management, today announces an update regarding
developments in both customer engagement and manufacturing.
The engagement with senior management of customers, which we
reported in June, has begun to generate proposals for specific
implementations and roll out opportunities. We have recently signed
contracts with two of the largest packaging companies in North
America, each with the potential for significant expansion. This
brings total contracted customers to 15, the vast majority in
leasing contracts (as opposed to pallet sales contracts). We are
currently conducting trials with nine additional potential
customers. Trials are only undertaken after a thorough screening
process in which the alignment of customer and Company metrics are
demonstrated, and since initiating the assessment process,
virtually every formal customer trial has led to a contract. In
addition, three of the largest retailers in North America have
accepted the RM2 pallet for trial by their vendors and we are
working with the retailers to implement defined loops between them
and their vendors.
Direct feedback from customers has highlighted the need to
change the friction coating method from powder coating to a gel
based system. The gel coating addresses customers' health, hygiene
and safety needs better, increases durability over the life cycle
of the pallet and is also expected to bring efficiencies and cost
savings to the manufacturing process. The first gel coating systems
are being commissioned, with the balance of the systems expected to
be delivered during Q4.
As a result primarily of the decision to change to gel coating,
the Company will not achieve the substantial upswing in production
that had been expected to begin in Q3 this year and accelerate
through Q4. This means that revenue and production numbers for the
full year will be significantly below previous guidance. Production
is expected to be not less than 2.5 million pallets in 2016, with a
production run rate at the end of the fourth quarter of 2016 of c.
300,000 pallets per month. Based on current contracts and trials as
well as discussions underway, the Company is confident of being
able to deploy profitably all the pallets produced.
Chief Executive Officer, John Walsh, commented:
"Introducing a revolutionary product into an established market
will always involve substantial challenges.
We have learnt difficult lessons, particularly with respect to
the friction coating, but I am confident that the issues have been
identified and are being addressed appropriately. I have no doubt
we have a product and an offering which is creating significant
value for customers, something which is increasingly recognized by
critical decision makers.
Although the decision to change to gel coating will have a
significant negative impact on reported revenues and cash flow in
2015, the Company believes that its long term competitive position,
brand and quality control objectives are well served by this
enhancement to the BLOCKPal and ultimately are expected to drive
higher market share, and greater revenues and earnings."
The Company will publish its results for the half year to 30
June 2015 on 30 September.
Forward-Looking Statements
Certain statements included in this announcement contain
forward-looking information concerning the Company's strategy,
operations, financial performance or condition, outlook, growth
opportunities or circumstances in the sectors or markets in which
the Company operates. By their nature, forward-looking statements
involve uncertainty because they depend on future circumstances,
and relate to events, not all of which are within the Company's
control or can be predicted by the Company. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Actual results could
differ materially from those set out in the forward-looking
statements. Nothing in this announcement should be construed as a
profit forecast and no part of these results constitutes, or shall
be taken to constitute, an invitation or inducement to invest in
the Company, and must not be relied upon in any way in connection
with any investment decision. Any forward-looking statements made
herein by or on behalf of the Company speak only as of the date
they are made. Except as required by the FCA, AIM Rules or
applicable law, the Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this announcement to
reflect any changes in the Company's expectations with regard
thereto or any changes in events, conditions or circumstances on
which any such statement is based.
For further information please contact:
+44 (0)20 8820
RM2 International S.A. 1412
John Walsh, Chief Executive
Officer
Jean-Francois Blouvac, Chief
Financial Officer
Ruari McGirr, Head of Planning
and Communication
+44 (0)20 7397
RBC Capital Markets 8900
Tristan Lovegrove
Pierre Schreuder
Ema Jakasovic
+44 (0)20 7638
Citigate Dewe Rogerson 9571
Simon Rigby
Kevin Smith
Ellen Wilton
Notes to Editors
RM2 International S.A. specialises
in pallet development, manufacture,
supply and management to establish
a leading presence in global
pallet supply and improve the
supply chain of manufacturing
and distribution businesses through
the effective and efficient use
and management of composite pallets.
It is quoted on the AIM market
of the London Stock Exchange
under the symbol RM2.L.
For further information, please
visit www.rm2.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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