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(Sharecast News) - Custom packaging manufacturer Robinson warned on Thursday that year-to-date earnings were "well behind" those achieved at the same time in 2020, with margins contracting due to the volatility created by sharp increases in resin prices, together with some lack of availability.
Robinson highlighted that since 1 January, the market price of resins used in the group had increased by an average of 60% as a result of "numerous force majeure declarations" by resin producers in the first quarter and a lack of a meaningful increase in imports into Europe, due to large-scale, weather-related disruptions in the US and shipping container shortages from Asia.
However, the AIM-listed group stated that although some convertors had been forced to shut down production lines, it was successful in mitigating "the substantial challenge" of securing resin supply to continue operations.
While group sales in the first five months of the year were 17% ahead of the same period in 2020, that figure dropped to just 2% when excluding the impact of the recently acquired Schela Plast business.
"After adjusting for price changes, sales volumes in the underlying business are 1% higher than 2020, which included additional demand due to the Covid-19 pandemic. As a result of the short-term transitional impact of resin price increases on our group, earnings for the year to date are well behind that achieved in the same period in 2020," said Robinson chairman Alan Raleigh.
Net debt almost doubled between 31 December to 31 May, up from £6.6m to £13.1m as a result of the Schela Blast acquisition.
Looking forward, Raleigh said: "Raw material shortages and price increases will continue to have a short-term impact on earnings in the first half of 2021. Whilst many of our customers have been supportive, accepting price increases outside of contractual resin escalators, the impact is not sufficient to offset the lag effect of additional material costs in the first half."
As of 0900 BST, Robinson shares were down 16.07% at 117.50p.
8 Sep 2022 12:04
IN BRIEF: Robinson swings to interim profit; revenue tops costs growth
Robinson PLC - Chesterfield, England-based plastic and paperboard packaging manufacturer - Swings to interim pretax profit following price increases. Pretax profit in six months to June stands at GBP2.8 million compared to a loss of GBP581,000 a year prior. Revenue climbs 20% to GBP25.4 million from GBP21.2 million, outpacing cost of sales, which widens by 17% to GBP20.8 million from GBP17.7 million.
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