(Sharecast News) - Plastic product specialist Coral Products reported a 2.27% fall in group sales in its first half on Monday, to £17.2m.
The AIM-traded company did, however, record a significant boost in gross profit, which increased 25% to reach £6m for the six months ended 31 October.
Reported profit before tax stood at £0.84m, slightly declining 6.6%.
Underlying basic earnings per share increased 12% to 1.27p while underlying operating profit excluding finance expenses advanced 23.3% to £1.7m.
Coral's underlying EBITDA also increased significantly, up 25.9% to £2.33m, as the board left the interim dividend per share unchanged at 0.5p.
On the operational front, Coral Products said its relatively stable revenues were influenced by a strategic decision to reduce involvement in lower-margin business lines, balanced by organic growth and the total contributions from the Manplas and Ecodeck businesses, which were acquired in September and October last year.
The company's focus on higher-margin products was evident in the increase in gross profit.
Coral said it was committed to investing in future growth through a capital expenditure programme, with a £0.5m investment in essential machinery during the period.
That included the installation of five new 350/650-tonne capacity injection moulding machines equipped with robotics, a new in-mould labelling line, and the commissioning of eight new injection moulds.
It said the new machines were already in operation and were expected to drive increased sales and earnings in the second half.
Sustainability was also a key focus, with initiatives such as adopting bio-based materials, an increasing shift toward recyclable materials, greater use of recycled materials in manufacturing processes, and enhanced supply chain tracking and transparency.
Looking ahead, despite ongoing market challenges, Coral said it was confident in its ability to meet its annual targets.
The new machinery investments made during the first half and further investments in pipe and sheet extruders were expected to drive growth in the near to medium term.
Since the period ended, Coral Products announced the appointment of Lance Burn as its new chief executive, effective from 2 January.
The board said Burn would bring much experience from his role as an executive board director at IG Design Group since 2012.
It said the transition in leadership would also see Joe Grimmond shift from an executive to a non-executive chairman.
"These results are pleasing as they show our ability to successfully bed down the four acquisitions we made in 2022, which doubled the size of our business, as well as weed out lower margin business lines," said Joe Grimmond.
"As a result of these changes, we remain on track with our year-end earnings targets.
"Our overall objective remains to build a specialist UK plastics business of scale, targeting profitable, high-demand sectors."
Grimmond said to that end, the firm maintained sales while substantially improving gross margins.
"Key to future growth is the investment we have made and continue to make in new machinery, positioning us to win new contracts and expand upon existing relationships.
"Overall markets are challenging currently, nevertheless, we are confident the business remains well placed."
At 1257 GMT, shares in Coral Products were up 6.22% at 14.34p.
Reporting by Josh White for Sharecast.com.
Coral Products (CRU)