Plastics Capital PLC Trading Update (3206S)

TIDMPLA

RNS Number : 3206S

Plastics Capital PLC

02 October 2017

2 October 2017

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 since 31 March 2017 has seen an improvement on the prior year. This improvement was driven primarily by organic sales growth as well as additional revenue contribution from three investments made by the Company during the course of last year.

Margins have been affected by the business mix which has shifted towards the Films Division, where sales have grown fastest and where margins are lower. Sterling has strengthened in H1 and has also contributed to weaker margins compared to the same period last year when the opposite happened.

Films Division

Sales have increased significantly across the Films Division relative to the same period last year; however, increasing raw material prices in Q1 have temporarily impacted gross margins.

Flexipol has traded particularly well and has a record order book as we move into the busy time of year. The additional capacity we have added in the last 18 months will now be used to very good effect.

Palagan is recovering from a difficult period of trading during FY16-17, having seen sales volumes increase by 14% year-on-year. The restructured management team are transforming the business operationally so that some new products can be introduced successfully and overall capacity has been increased.

Sales of Synpac's products, which now form part of Flexipol, have also seen strong growth, although margins have been affected by rising raw material prices, caused by the strength of the Euro as the majority of its films are purchased from European producers.

Industrial Division

In the Industrial Division, sales are up by 10% year on year which is encouraging but still less than we anticipated. In particular, sales at our bearings business have been lower than expected due to delays in orders received on projects won from two key accounts. Some improvement is expected in H2. In the period, we have successfully converted a number of new projects which will enable this business to further accelerate its growth over the next 12-18 months.

Demand at our matrix business has been steady. The main focus in this business has been integrating the complementary distributors/manufacturers that we have acquired over the last 12-18 months. We are in the process of restructuring small manufacturing units from both the USA and Italy into the C&T factory in Wellingborough, which should lead to cost savings and will allow the acquired businesses to increase their focus on sales.

Our mandrel business has grown substantially in H1 as we have assimilated key accounts won in prior periods. We have added further production capacity, as planned, and are now expanding into enlarged premises as well as establishing manufacturing capacity in West Virginia. The order book remains strong and we expect continued growth in this business during H2.

Commenting, Faisal Rahmatallah, Chairman, said:

"Strong organic sales growth is being achieved broadly across the Group, although it has been stronger than expected in our Films Division and less so in our Industrial Division. The three relatively small acquisitions made last year are performing well. The capacity that we have recently put in place is already being well utilised and we will continue to invest to take advantage of the growth opportunities that we see in front of us. We anticipate a year of good progress."

For further information, please contact:

 
 Plastics Capital plc            Tel: [phone] 
 Faisal Rahmatallah, Executive 
  Chairman 
 Nick Ball, Finance Director 
 
 Cenkos Securities               Tel: [phone] 
 (Nomad and joint broker) 
 Mark Connelly 
 Callum Davidson 
 
 Allenby Capital Limited         Tel: [phone] 
 (Joint broker) 
 David Hart 
 Katrina Perez 
 
 
 
 
 

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 40% of its GBP77 million sales are made outside the UK to more than 80 countries.

Further information can be found on www.plasticscapital.com

This information is provided by RNS

The company news service from the London Stock Exchange

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October 02, 2017 02:00 ET (06:00 GMT)