TIDMPLA
RNS Number : 0564D
Plastics Capital PLC
05 October 2018
Plastics Capital plc
(the "Company" or the "Group")
Trading Update
Plastics Capital plc (AIM: PLA), the niche plastics products
group, provides an update on trading for the financial year to date
and is pleased to confirm that the Company continues to trade in
line with market expectations.
Trading during the six-month period ended 30 September ("H1
2018/19") saw an improvement on the prior year. Sales have
continued to grow at double digit rates and profitability has
improved as the revenue mix shifted towards the higher margin
Industrial Division.
Currency has also been helpful as the benefit of Sterling's
weakness since the Brexit referendum is now being felt as the
forward contracts taken out prior to that time have settled and
have been replaced by other contracts that have been struck at the
weaker post-Brexit rate.
Films Division
The Films Division has continued to perform well and to derive
the best from the combination of the three businesses that we have
brought together. Considerable effort has gone into integrating the
three businesses under one management team so that total demand can
be optimised across the available capacity and sales activity can
proceed in an effectively coordinated manner.
The Films Division is also busy with several projects to
increase capacity and capabilities. Barrier film extrusion, high
quality printing and specialist sack making capacity are all being
added to enable the division to serve its existing customers more
comprehensively in the future and to create the opportunity to
acquire new customers.
We are creating a closed loop recycling system within the
division to recycle most of the waste that we create. This recycled
material can be reused in our own film packaging products, where
specifications allow as well as in new products that we have not
considered before.
Industrial Division
The Industrial Division has performed well over the last six
months achieving double digit growth over the same period last
year, when sales were disappointing.
Our bearings business suffered a setback in H1 2017/18 due to
delays and weak demand on two large projects, but these projects
have now picked up and demand from other customers has been
strong.
Our matrix business has also performed well as the restructuring
of the businesses acquired last year in the USA and in Italy is
starting to produce good results. Sales growth has been strong as
we continue to broaden the range of products offered.
Our mandrel business had a good start to the half year,
consolidating on what was achieved in the prior 12 months, but the
order book weakened significantly as the half year progressed and
is currently worse than we would expect.
Plastic Waste
The issue of recycling and reusing plastic waste has become
"front page news" in the last year. Whilst the public outcry has
focussed on single use consumer plastic products, which is not an
area we have any exposure to, we cannot be complacent with regard
to this issue. We intend to do everything we can to position the
Group so that it can pursue the new opportunities and avoid the
threats that arise from this entirely justifiable cause.
It is important to point out that most of our products
substitute others made in materials that are less sustainable than
plastic; they also enable our customers' products to be more
sustainable than they would otherwise be. Plastics are far from
being universally a bad thing; however, they do not degrade easily
and they float, which means they lead to a lot of visible waste.
This waste undoubtedly needs to become part of a closed loop system
and much can be done to improve recycling and reuse.
We have an objective to recycle and reuse, within our own
facilities, 75% of our internally generated scrap material within
the next two years. Previously, most of this would have gone to
recyclers and we would not have been aware if any of this material
had formed part of a closed loop system. Also, we must consider
using any materials in our products whether or not they are plastic
if they are more environmentally sustainable and can meet our
specifications in other ways. For example, biodegradable films made
from plant-based extracts may form part of the solutions we offer
to customers increasingly in the future.
We have recognised that, at its core, our business relies not on
plastics technology but on the ability to find innovative solutions
to our customers' problems in niche market applications.
To signal the importance we give to this matter we are
considering changing the company name to something that resonates
with this core competence rather than with plastic itself.
Commenting, Faisal Rahmatallah, Chairman, said:
"Significant organic growth is being achieved across both our
Divisions. Except for our mandrels business, the order books are
healthy. We continue to add capacity to fulfil this demand and to
enable future growth thereafter. We acknowledge the issue of
plastic waste and whilst the public focus is on single use consumer
products which is an area we do not compete in, we are taking
significant steps to address it in whatever way
possible. We have made a good start to the year and anticipate a year of further good progress."
For further information, please contact:
Plastics Capital plc Tel: 020 7978 0574
Faisal Rahmatallah, Executive
Chairman
Nick Ball, Finance Director
Cenkos Securities Tel: 020 7397 8900
(Nomad and joint broker)
Mark Connelly
Callum Davidson
Allenby Capital Limited Tel: 020 3328 5656
(Joint broker)
David Hart
Notes to Editor
Plastics Capital is a niche manufacturer of specialist plastic
products. Applications for these products vary widely and examples
include:
-- Packaging for the food manufacturing and distribution - films, sacks and pouches
-- Steering columns and instrument control knobs in the
automotive industry - plastic ball bearings
-- Hydraulic and industrial rubber hose manufacture - various types of plastic mandrel
-- Cardboard box manufacture - plastic creasing matrices
Plastics Capital's business model is based on understanding
customers' problems in depth, and then developing and mass
producing proprietary, technical solutions for these problems.
The business operates through two divisions, Films and
Industrial, and has the majority of its production in six UK based
factories, with a further three factories in Asia. Approximately
50% of its GBP77 million sales are made outside the UK to more than
80 countries.
Further information can be found on www.plasticscapital.com
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END
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