Trifast PLC Trading Update (9356B)

TIDMTRI

RNS Number : 9356B

Trifast PLC

26 September 2018

Wednesday, 26 September 2018

Trifast plc

(Trifast, Group or Company)

Leading international specialists in the engineering, manufacturing and distribution

of high quality, industrial fastenings to major global assembly industries

45 years of service to industry

"HOLDING THE WORLD TOGETHER"

TRADING UPDATE

"This remains an exciting time for Trifast as a business

- the Group is financially well positioned to pursue its 'invest and grow' strategy"

Trifast plc (LSE: Main market: TRI), provides the following trading update ahead of the Capital Markets Day operational visit taking place at its Italian operation, TR VIC on the 27-28 September 2018; no other financial information will be released during the visit.

HIGHLIGHTS

 
 
        *    Solid revenue growth in the first five months across 
             all our regions 
 
        *    Increased electric vehicle production provides 
             opportunities for ongoing growth 
 
              *    Over 90% of our automotive supply remains outside of 
                   the combustion engine and power train, 
 
 
             mainly in the seating, console, dashboard and lighting systems 
 *    PTS, acquired in April, integrating and growing well 
 
 
              *    Investment in manufacturing capacity and capabilities 
                   ongoing, with our mezzanine expansion in Singapore 
 
 
             on track to be fully operational in HY2 
 
        *    Project Atlas, our significant multi-year investment 
             in our systems, policies and procedures is 
             progressing well 
 
        *    Pipeline of opportunities and new business remains 
             very encouraging across the Group 
 *    Solid balance sheet, and healthy cash generation 
 
 
        *    Current financial year's trading performance in line 
             with management expectations 
 

OUR BUSINESS

Trading

The Group has continued to perform well across all its regions, with sales to multinational OEMs remaining TR's largest source of growth and contributing c.70% to annualised sales.

Within the key sectors we serve, domestic and international demand remains reassuring across both Asia and Europe. Although relatively small, our US region is growing exceptionally well this year from a mix of increasing electronics and automotive sales. In the UK we have seen a solid performance across our major markets, with the only exception being UK automotive, where volumes are being temporarily hampered as we mentioned in July, by diesel-led transitory reductions and changes to product cycles and model builds.

Globally automotive continues to be our strongest sector for organic growth as we continue to increase our market share and site penetration with our multinational Tier 1 and OEM customers. The increase in electric vehicle production is a further significant growth opportunity for us providing additional access points as many more new platforms come on line, battery technology develops and the demand for charging stations accelerates.

As previously guided, the current solid revenue growth is not yet being reflected in our underlying operating margins as we continue to invest for the future. But our quality of earnings continues to be shown in our ability to consistently turn underlying EBITDA in to underlying cash, whilst our clear strategy for growth remains focused on increasing our EPS ratio year-on-year.

The Board remains committed to a progressive dividend policy based on the Group's overall performance whilst also balancing its investments for future growth. Our balance sheet is in good shape, with a degree of flexibility to debt finance future acquisitions and investments. To supplement this, discussions are already ongoing with a number of financial institutions, to secure access to additional funds to support our ongoing growth plans. Combine this with the people, skill set and the flexibility to keep moving forward and the Board remains confident of delivering on its expectations for the year ahead.

Investing for the future

On the back of exciting new business coming on stream and an array of pipeline prospects in development, we continue to invest in our business locations and in our workforce. Capital investments in Singapore, Italy and Taiwan are building our capacity and capabilities in these locations. While our recent warehouse expansions in the USA, Holland and Shanghai support the strong growth we have seen across these sites. In Spain, TR Espana, our newest and rapidly growing greenfield site continues to successfully drive opportunities not just locally, but also for the wider Group.

As well as investing in the Group's manufacturing and distribution footprint, shareholders will recall that we added PTS to our portfolio five months ago. It is pleasing to report that this operation has settled well into the Trifast Group. Not only does PTS widen our customer base, it extends our presence in the stainless-steel fastener arena (holding one of the widest product ranges of any supplier in Europe), boosting our core OEM customer offering and supporting ongoing distributor sales growth. PTS remains on target to be earnings enhancing in the year ending March 2019.

Our multi-year investment programme, Project Atlas is running to plan. Our teams are very excited about the prospects of this programme which will create the Trifast of tomorrow as well as delivering the ever-evolving needs of our growing multinational OEM customer base. With the Project Atlas investment, Trifast will transcend from being a leading international company into a truly world-class global industrial player.

External market factors

As anticipated in our full year expected gross margins, within the UK business we have seen the impact of input cost inflation in the period as a result of the weak pound. Outside of this we believe that the operational and financial impact of any Brexit scenario will be manageable. We have had a cross-functional Brexit team in place for the last two years and are fully on track to carry out our contingency plans to help mitigate the risks attached to a potential no-deal Brexit scenario.

We are also closely monitoring the escalating trade tensions between the USA, Europe and China. Although due to our diversified supply chain structure, to date we do not expect the impact of this to be material to the Group.

Despite this backdrop we continue to have confidence in our model. As an international business with c.70% of revenues and profits being generated outside the UK, we recognise the global opportunities that lie ahead in providing good product, skills and services to industry. We have these, coupled with the foresight and flexibility around the Group to keep moving forward and delivering on our future aspirations.

SUMMARY

Overall, our business is in good shape and the current trading levels, our ongoing investments and our strong pipeline make this an exciting time for the Group. As ever, we continue to search out acquisition opportunities to add further value to our customer offering and global footprint. The Group remains on target to deliver results for the year ending March 2019 in line with management expectations.

The Directors look forward to providing the next update at the time of the Group's Half-year results, which will be released on Tuesday, 13 November 2018.

 
 Further enquiries please contact: 
 
  Trifast plc 
  Malcolm Diamond MBE, Non-Executive Chairman 
  Mark Belton, Chief Executive Officer 
  Clare Foster, Chief Financial Officer 
  Tel: [phone] 
  Email: [e-mail] 
 
   Peel Hunt LLP Stockbroker & financial adviser 
   Mike Bell 
   Tel: [phone] 
 TooleyStreet Communications IR & media relations 
  Fiona Tooley 
  Tel : [phone] 
  Email : [e-mail] 
 
 
  TRIFAST PLC 
  LSE Premium Listing: Ticker: TRI 
  About us: Trifast is a leading international specialist in the 
   engineering, manufacturing and distribution of high quality industrial 
   fastenings to major global assembly industries. We are a 24/7 'full 
   service provider' offering 'end-to-end' support to all our customers. 
   Our success and ongoing growth is based on a unique mix of high 
   quality manufacturing, sourcing know-how and adaptable, reliable 
   global logistics. At March 2018, key sectors served by TR are: 
   automotive (33%), domestic appliances (22%), electronics (16%) 
   and distributors (10%) with the balance from a mix of sectors (19%). 
   The Group employs c.1,300 staff across 31 global locations across 
   the UK, Europe, Asia and the USA. 
  For more information, please visit 
   Group website: www.trifast.com 
   LinkedIn: www.linkedin.com/company/tr-fastenings 
   Twitter: www.twitter.com/trfastenings 
   Facebook: www.facebook.com/trfastenings 
 
   Registered trademarks are shown in italic 
 

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September 26, 2018 02:01 ET (06:01 GMT)