LONDON (Alliance News) - Plastics Capital PLC on Monday reported a significant drop in interim profit due to a large swing in the impact of foreign exchange movements, as the company is proposing to change its name to Synnovia PLC.
For the six months to September 30, the plastic product manufacturer's pretax profit decreased 42% to GBP905,000 from GBP1.6 million the year before.
Plastics Capital's foreign exchange impact on derivatives for the period was a GBP712,000 loss compared to a GBP1.2 million gain the year before.
The firm's pretax profit before foreign exchange and exceptional items was GBP1.6 million, a 60% increase on the GBP1.0 million recorded last year.
Plastics Capital's revenue in the first half increased 11% to GBP40.6 million from GBP36.5 million.
"I am pleased to report continued strong organic revenue growth across the group. This is now being reflected in improved profitability as the mix of revenues in our two divisions has rebalanced and because we are now feeling the full effect of sterling's devaluation in 2016 after the Brexit vote," said Chairman Faisal Rahmatallah.
The company's Films division - which accounts for 53.4% of revenue - saw sales rise 12% in the first half. Raw material prices were "stable", so a more favourable product mix was attributed for the increase.
Plastics Capital's Industrial division - which makes up the remaining 46.6% of revenue - saw a 11% rise in revenue at constant current in the first half but suffered a 1.3% loss on sales due to currency movements.
The company did not declare an interim dividend, same as the year before.
The company is planning a name change, to Synnovia, to signal that the company will "consider using any materials", and not just plastic, in its products moving forward.
Rahmatallah said: "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.
"For reasons of sustainability and to minimise plastic waste, 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."
The proposed name change will be put to investors at a general meeting on December 20.
Plastics Capital said the second half has started "favourably" with the "usual seasonal upturn" in the Films division and "continued good performance" from the Industrial division.
Rahmatallah added: "However, these are uncertain times - trade wars, Brexit and plastic waste are all factors, amongst others, that give us pause for thought. If these factors remain benign or at least we are given sufficient time for us to adapt, the board remains confident about the outcome for the current financial year and future growth of the group for the medium to longer term."
For the year ended March 31, Plastics Capital posted pretax profit of GBP2.8 million on revenue of GBP76.7 million.
Shares in Plastics Capital were down 0.3% Monday at 104.24 pence each.
