LONDON (Alliance News) - Plastics Capital PLC Monday said its industrial division has experienced weaker demand in the year-to-date than in the prior year.
In a statement, the niche plastics products group said the weaker demand was partly expected due to older projects falling away before new projects come into full production in the second-half of the current financial year. However, Plastics Capital also said it understands that "certain customers overstocked last year and this has impacted sales in the current year as compared to our expectations."
Plastics Capital said it has in the meantime focused on new business generation. It said it has a "significant pipeline" of projects which have reached prototype testing and production trials with customers worth more than GBP5.0 million in annual sales. Plastics Capital said it expects to convert a "significant proportion" of these in the next six months.
Plastics Capital also said its operations in China are progressing well. It said that local demand for creasing matrix has been below expectations, but is "very pleased" with the improvements at Shengli, the recently acquired creasing matrix manufacturer based in Beijing. It said there have been "notable improvements" in processing speeds, quality controls, financial reporting and health and safety standards since the acquisition's integration.
Meanwhile, the company said its bearings sales team has converted three plastic ball bearing projects for different Chinese CCTV camera manufacturers amounting to about GBP250,000 in annual sales when they move into full production. The company has also started to ramp up production of machined plastic ball bearings in the new factory in Shanghai.
The company reported "steady growth" in its UK-based packaging division, with "strong" sales in the spring and early summer being "counteracted" by a "relatively weak" holiday period during August.
The company also said it expects its new range of durable creasing matrix, called Pink, to add about GBP1.0 million to sales over the next two to three years.
Executive Chairman Faisal Rahmatallah said the group is pressing ahead despite slow demand and some project delays.
"We are making good progress in China and in our packaging businesses. The industrial division is experiencing some project delays and slow sales partly due to customer overstocking, but it continues to have a very strong pipeline of opportunities and previously converted business which should flow into production over the next twelve months. Altogether we anticipate another year of reasonable progress," Rahmatallah said.
Plastics Capital shares were Monday quoted down 7.8% at 106.50 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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