Checkit Regulatory News (CKT)

19 Aug 2009 07:00

Elektron PLC 19 August 2009

TRADING UPDATE: HALF YEAR ENDED 31 JULY 2009

First Half Results In our last annual report, we stated that we are no longer seeing dramatic declines in our business, and that some areas are seeing improvements. We are pleased to confirm that this continues to be the case. Group sales in the six months to 31 July 2009 were approximately £14 million, while operating profits were slightly higher than internal budgets as a result of continuing actions taken to realign the cost base which started last year.

  At Elektron Components ("ECD"), (our largest division which accounts for approximately 60% of group turnover), sales in the six months to 31 July 2009 were in line with internal budgets. However, gross margins increased as a result of lower material and labour costs, resulting in a substantially improved operating profit above internal forecasts and in line with the first half of last year.

Hard Metal Division ("HMD") sales, which account for approximately 20% of group turnover, were however lower than expected following continuing weak activity in the oil and gas markets served by Total Carbide and the division has continued to operate at a loss. However, market share has been maintained and cost cutting measures continue to be implemented in order to minimise losses. As HMD is a late cycle business, it is expected to see a sharp swing back into profit when market conditions improve.

Elektron Instruments Division ("EID"), which accounts for approximately 20% of group turnover, suffered continued sales weakness but gross margins have held reasonably firm. This division is being restructured, with the manufacture of Sifam brand control knobs and meters being transferred to ECD's China factory and Indian subcontractors. This will leave EID focusing on Digitron temperature and pressure monitoring systems, together with Queensgate, the nanomeasurement company.

Second Half Outlook

Although monthly order intake has been inconsistent, July saw a significant increase at ECD. While it is difficult to accurately predict what may happen in the second half, the Board currently expects that the Group will trade profitably over the full year at the operating level before remaining restructuring costs and is confident that the plans in place will deliver long-term profit and dividend growth.

For further information, please contact: Keith Daley Elektron Plc Tel: 0208 348 0810 Charles Cunningham FinnCap Tel: 0207 600 1658 Cautionary Note This announcement contains certain forward-looking statements that have been made by the Directors in good faith using information available up until the date they approved the statement. Forward-looking statements should be regarded with caution as by their nature such statements involve risk and uncertainties relating to events and circumstances that may occur in the future. Actual results may differ from those expressed in such statements, depending on the outcome of these uncertain future events.