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18 Nov 2008 07:00
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INTERIM MANAGEMENT STATEMENT
Β 18 NovemberΒ 2008
British Polythene Industries PLC issues today the following Interim Management Statement for the 9 months to 30 September 2008.
As we indicated at the time of our Interim Statement onΒ 29 August,Β the Group is currently facing a very challenging situation, with fluctuating input costs and patchyΒ demand from certain sectors, particularly in theΒ UK,Β and nowΒ aΒ deteriorating economic background. Despite these difficulties, the outcome for the year, before restructuring costs,Β is likely toΒ beΒ broadlyΒ in lineΒ with managementΒ expectations.
Β DemandΒ fromΒ theΒ UKΒ constructionΒ sectorΒ and associatedΒ industries, which traditionally accounts for around 15% of Group turnover,Β isΒ currentlyΒ down byΒ nearlyΒ a third. Going forward, we realise that the current drop in demand from thisΒ sector is likelyΒ to continue for some time. In contrast,Β other markets, particularly those related to agriculture andΒ food retail,Β continue to showΒ modestΒ volume gains. Overall,Β totalΒ Group volumesΒ for the 9 monthsΒ to 30 September 2008Β are in line with last year,Β butΒ wereΒ over 5%Β behindΒ inΒ the third quarterΒ compared toΒ 2007.
Our raw material input costsΒ enteredΒ the third quarter at record high price levels. We started to see an easing in priceΒ byΒ the start of the fourth quarter and this now looks to be continuing into DecemberΒ and perhaps beyond. This drop in price would normally have resulted in aΒ recoveryΒ in profitΒ levelsΒ for the last quarter, but we have been hit by record high energy costsΒ in theΒ UK. These costsΒ will beΒ over Β£1 million higherΒ than last yearΒ for the month ofΒ NovemberΒ aloneΒ and we expect the full year cost to be Β£8 million higher than 2007. We see theseΒ abnormalΒ energyΒ costs continuing into December and thenΒ starting to reduceΒ as we enter 2009.
We have already taken some steps toΒ reduce our cost base and announced over 50 redundancies at various plants. TheΒ associatedΒ restructuring costsΒ areΒ estimated at Β£1 millionΒ and will bring our total restructuring costs toΒ date toΒ Β£1.5 million
We haveΒ recentlyΒ extended our current banking facilities and agreed new facilities to replace our private placement due for repayment in July 2009. Our total available facilities are just over Β£100 million with the revolving creditΒ elementΒ of Β£57.5 million renewable in 2011 and asset finance of Β£17.5 million repayable in up to 5 years. BankingΒ covenantsΒ under these facilities willΒ provide flexibility onΒ current and futureΒ restructuring costs.Β
WeΒ expect toΒ announce further initiatives in the coming weeks to align our capacity with market demand.
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Enquiries :
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Cameron McLatchie, Chairman
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British Polythene Industries PLC
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01475 501000
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John Langlands, Chief Executive
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British Polythene Industries PLC
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01475 501000
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Tim Spratt/Nicola Biles
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Financial Dynamics
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0207 831 3113
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