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21 Jul 2009 07:00
FROM CITIGATE DEWE ROGERSON FOR
PRESS RELEASE
FOR RELEASE 07:00 21 July 2009
Brammer plc
Trading Update
Strategy Continues to Provide Resilience
Brammer plc, the leading pan European added value technical distributor provides the following trading update ahead of its interim results announcement on 28 August 2009.
Trading
Trading in the period 1 January to 30 June 2009 has reflected the difficult trading conditions prevailing in most of the Company's markets. Overall, first half 2009 sales at actual currency rates are down 10.5%, although there were 2 more working days in the comparable 2008 period . Key account sales and industry sector focus strategy continues to provide resilience to these difficult trading conditions. On a sales per working day basis (SPWD), at actual currency rates, sales are down 8.5%. Excluding the year on year effect of acquisitions, SPWD at actual rates are down 10.0%. Excluding the benefits of currency and acquisitions, SPWD were down 17.8%.
Gross profit margins continue to be maintained at similar levels to last year. As mentioned in our IMS on 19 May, management has implemented significant cost reduction programmes in all territories and these actions continue to be executed in line with our expectations. Based on measures completed and initiated so far, we expect reported sales, distribution and administration costs, at constant currency, to be around £6 million lower in the first half of 2009 and at least £12 million lower for the full year than in the comparable 2008 periods. We anticipate the cash cost of these restructuring measures will represent a payback of less than one year and this will be taken as an exceptional cost. We exceeded our first half inventory reduction target, reducing inventory by £19 million; net inventory at the period end was £72 million. We continue to pay close attention to working capital and cash management, and we expect reported net debt at the half year will be approximately £69 million, down £15 million on 31 December 2008, including a currency benefit of about £10 million. Banking facilities, which are secured until 2012, remain comfortably in excess of the group's net debt, and we continue to operate within the terms of those facilities.
Corporate Broker
RBS Hoare Govett Limited has today been appointed as sole broker and financial adviser.
Outlook
Sales in May and June in most territories were at a similar level compared with March and April, suggesting we have reached stability, albeit at a lower level than for the comparable period last year. There are some signs of increasing demand from our automotive and 'Tier One' customers, and we expect to see the benefit of a significant number of both national and European key account contract wins in the second half. The Board intends to continue its focus on cost control, cash flow and driving greater efficiencies from the business, whilst continuing to support our key growth drivers.
We are confident that our strategy of focusing on key accounts, insites and cross selling throughout Europe to drive profitable market share gains remains sound for the medium and longer term, and that Brammer will be able to take advantage of the opportunities available when the economic environment improves.
Enquiries: Brammer plc 0161 902 5572
David Dunn, Chairman
Ian Fraser, Chief Executive
Paul Thwaite, Finance Director
Issued: Citigate Dewe Rogerson Ltd 020 7638 9571
Martin Jackson/Nicola Smith
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