Robinson Share News (RBN)

LONDON (Alliance News) - Robinson PLC shares fell on Friday as the company reported a sharp drop in annual profit due to reduced gross margins and higher operating expenses.

Shares in the paperboard and plastic packaging manufacturer dropped 12% at 80.10 pence on Friday.

Robinson reported pretax profit at GBP630,000, down from GBP1.6 million due to a reduced gross margin at 19% from 23%, as a result of the lag effect of increasing resin prices and higher input costs coming from the weakness of sterling and an adverse product mix.

However revenue rose by 9.0% to GBP29.8 million from GBP27.5 million, due to positive exchange rate movements and increased resin prices, as well as increases in volumes as Robinson's new business came into production.

Robinson said it had a particularly challenging year in 2017, with its current plan of recruiting new people and investment in its manufacturing capability adding to the strain of losing two major contracts.

The company declared a full-year dividend of 5.5 pence per share, in line with the year before.

"I am pleased to report that new business has been secured that has offset the previously lost trade and is the basis for growth that has started to come through," said Chairman Richard Clothier.

"New business now in the pipeline will require more investment in plant and this will use more of our borrowing capacity. Higher earnings to justify this will be essential and we are actively working to achieve the efficiencies that are needed to rebuild margins. This is receiving close attention and will take time but we do expect higher sales in 2018," Clothier added.