Equity Developments note10 Jun 2010 15:42
API Summary from Equity Development:
The group has reported sales revenue of £84.6m this year, which represents a 9.5% fall from the previous year. An improved operating profit of £0.9m was achieved this year compared to £0.1m last year.
The company struggled in the first half of the year, but improved revenue by 25% in the second half translating into a return to profitability of £1.9m. The group cites the impact of recession and the timing of cost reduction methods as an explanation for this U-shaped performance.
The group’s European businesses are doing well and have delivered profits offsetting losses in other regions. North America and Asia have both reduced losses compared to 2009 but Asia Pacific’s otherwise good performance has been hampered by continuing losses in China.
Sales revenues have dropped by 9.5% in a relatively uniform fashion across all regions, but the group has been able to increase profits by a focused reduction of their cost base. They have also benefitted from lower raw materials costs, lower utility prices and more favourable exchange rates.
The US economy is slowly recovering from recession and it is hoped that sales volumes in the region will recover accordingly. The group is also buoyed by increased brand owner activity on packaging developments and new projects at advanced stages. Some concerns must persist due to tentative confidence amongst particular customers and uncertainty over raw material prices, but otherwise API have addressed immediate concerns regarding their debt and the cost base and are well placed to grow the business. To have achieved that, yet being valued with a market capitalisation of only £7m, seems most incongruous.
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