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RM2 International Full-Year Loss Narrows, Appoints New CEO (ALLISS)

Fri, 30th Jun 2017 18:22

LONDON (Alliance News) - Pallet maker RM2 International SA said on Friday said that its loss for the year narrowed as it signed outsourcing production agreements in China and Mexico, a step change in its manufacturing operations, and announced the appointment of a new chief executive.

For calendar 2016, RM2's pretax loss narrowed to USD52.8 million, from USD58.8 million in 2015, of which USD10.6 million was due to costs associated with equipment no longer being suitable for a new production strategy, value corrections on raw material inventory, lower realisation value of deployed pallets currently available for sale and a goodwill impairment.

Gross profit fell to USD30.8 million, from USD36.5 million, on revenue of USD8.9 million, up slightly from USD8.0 million.

Rental activity more than doubled to USD5.7 million, from USD2.7 million.

The company did not declare a dividend.

In the first half of the financial year, 92,000 pallets were produced in Canada and marginal subsequent production occurred over the second half as production equipment was dismantled and shipped to China and Mexico.

In April 2016 the company agreed to outsource production capacity to China's Zhenshi Holding Group Co Ltd, and in September 2016 made a deal with US-based Jabil Circuit Inc, for the mass production of RM2's BLOCKpal pallet in Mexico.

Outgoing Chief Executive John Walsh said that outsourcing the company's manufacturing operations to "hugely experienced partners at Jabil and Zhenshi has given us significant cost benefits, greater flexibility and production volumes and I am pleased with progress at both these facilities".

"Interest in our BLOCKPal pallets has been strong and I'm confident we now have the right partners and tools to turn that interest into significant deployment," he added.

The company also announced on Friday that Jasper Judd will succeed Walsh as CEO and has been appointed to the board effective immediately.

Judd worked for ten years at Brambles Limited, an Australia-listed multinational, whose biggest business is pallet pooler CHEP.

Separately, RM2 said it will raise USD20.0 million from a subscription of newly issued Class B convertible preferred shares.

Of the USD20.0 million shares, USD2.5 million worth will be issued to to RM2 Chairman R Ian Molson, USD1.0 million to Verlinvest SA, USD6.0 million to Woodford Investment Management LLP and the balance to new and existing investors.

Of the 92.4 million convertible preferred shares to be issued, 4.5 million Class B convertible preferred shares were issued at 35.00 pence each in June and an initial tranche of 41.5 million shares will be issued at a price of 16p each.

Shareholder approval will be sought at a meeting on July 17 for the issue of the remaining convertible preferred shares, which are to be priced at 16.00 pence.

The June tranche represents USD11.1 million of the total USD20.0 million subscription.

Shares in RM2 closed down 16% at 13.00p on Friday.

By Maryam Cockar;; @MaryamCockar

Copyright 2017 Alliance News Limited. All Rights Reserved.

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