HAMP.L Regulatory News (HAMP)

3 Feb 2009 07:00

Hampson Industries PLC

Interim Management Statement

Hampson Industries PLC ("Hampson" or "the Group"), the international aerospace and precision engineering group, today issues the following Interim Management Statement covering the period since 30 September 2008.

Highlights

In contrast to the current macro economic environment, Hampson has continued to trade strongly over the last quarter with results comfortably ahead of the Board's expectations. 

Despite a steep reduction in our automotive business, we expect to continue to benefit from buoyant tooling  demand in the final quarter and for the Group to deliver a strong performance for the year.

Q3 performance

Through our recent acquisition strategy we have become the largest independent manufacturer of precision tooling systems for aerostructures in the world. With the increasing use of large, carbon composite structures in new airframe design our tooling businesses have provided us with a unique asset and a strategic position of considerable strength. On an annualised basis, tooling now constitutes approximately half of the Group's revenues and its strong growth profile has provided a much greater overall resilience to our business.

Our two recent acquisitions, Odyssey Industries Inc. ("Odyssey") & Global Tooling Systems Inc. ("GTS")  continued to trade very strongly throughout the period with both order and revenue growth considerably in excess of our pre-acquisition expectations. Our existing tooling business, Coast Composites Inc. has secured strategically important contracts to manufacture wing and fuselage tools for the Airbus A350, with incoming orders increased by 100% over the nine months to 31 December 2008, compared to the same period in the previous year. 

Based on the level of enquiry and pipeline of work currently in tender, we are seeing significant opportunities and are confident of securing further large tooling contract wins in the coming months. Production capacity  is expanding at all sites and GTS is currently relocating into a new, state-of-art, 215,000 square feet facility to accommodate its growing order book. Additional opportunities to further expand in this high demand environment are currently being considered. 

Operational improvements continued to be made in the Automotive Turbocharger business in the third quarter, but as with other automotive businesses we have seen a significant reduction in orders in recent months which will result in the business becoming loss making. We have already taken rapid action to reduce the cost base including headcount reductions and short time working, and as the longer term demand prognosis becomes clearer, we will act promptly to take whatever further restructuring action is necessary. The Automotive Turbocharger business currently represents only 8% of Group revenue.

Cash Flow

The much stronger than expected growth in tooling revenue has resulted in increased working capital  investment  in the period which will generate healthy cash flow over the next six months. As a result, net debt at the end of the third quarter was slightly higher than planned at £137 million, of which £11 million was due to the retranslation at the current rate of exchange of the Group's USD50 million private placement.

  Outlook

We expect the Group overall to finish the year in line with the Board's expectations. Underlying this we expect to see some changes in the relative performance of certain of our businesses in the final quarter as a result of the factors described below. 

In aerospace, we expect continuing strong performance in Composites & Transparencies, with tooling demand in particular remaining buoyant. The current favourable sterling-dollar exchange rate will also continue to benefit Group results. Our revenues in Components & Structures will see some reduction going forward as a result of supply chain rationalisation of one of our airframe customers.

We expect a worsening outlook in the final quarter and into 2009/10 for our turbocharger business in the wake of extremely difficult market conditions for automotive component manufacturers globally.

With almost half of the Group's revenue now generated from tooling sales, the demand outlook for this segment remains by far the most dominant influence on the Group's future financial performance. With the strength of current order books, the visible pipeline of potential new business and the opportunities available to expand and develop the tooling and composites businesses further, the Board continues to remain confident over the Group's prospects going forward.

The terms "Trading Results" or "Results" used in this IMS are before exceptional items relating to restructuring and  rationalisation charges, impairment charges, changes in the net value of derivative financial instruments and the amortisation of intangible assets on acquisition.

Ends.

Further information:

Kim Ward, Chief Executive +44 (0)1384 472941

Howard Kimberley, Finance Director +44 (0)1384 472946

Ed Orlebar/Marylene Guernier, M:Communications +44 (0)20 7153 1523/1269

About Hampson:

The Group's operations are structured into three business segments, serving primarily the global commercial and military aerospace and specialist engineering markets from manufacturing facilities in the UK, North America and India.

Approximately 92% of the Group's sales are derived from its aerospace activities, the balance from the market for automotive turbocharger components.

In June 2008, Hampson completed the acquisition of Odyssey Industries, Inc. and Global Tooling Systems, Inc. for a total consideration of up to USD314 million, partly financed through a £65 million placing and open offer. The Group employs approximately 2,300 people worldwide. 

Hampson Industries PLC is listed on the main market of the London Stock Exchange (Symbol: HAMP). For more information on Hampson: www.hampsongroup.com 

Cautionary Statement: 

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Hampson's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.

Hampson undertakes no obligation to revise or update any forward looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.