HAMP.L Regulatory News (HAMP)

Hampson Industries PLC

Pre Close Trading Statement & Directorate Change

Hampson Industries PLC ("Hampson" or "the Group"), the international aerospace group, today issues the following trading statement for the year ending 31 March 2010. The Group's Preliminary Results will be announced on 9 June 2010.

Markets and Performance

The Group reported, on announcing the equity fundraising and Interim Management Statement ("IMS") on 2 February 2010, that whilst the initial signs of recovery in tooling demand were encouraging, the Board considered it appropriate to remain cautious on the short term outlook, pending further clear evidence of this trend being sustained. Conditions in the aerospace tooling market have remained largely unchanged since providing that guidance.

As detailed below, although tooling revenues have been lower than anticipated during the final quarter, the Group expects to report trading profit* for the year ended 31 March 2010 in line with market expectations.

In aerospace tooling, the Group has secured further new orders for composite wing and fuselage tooling since the previous quarter end, notably in respect of the A350 and CSeries programmes. Delays have continued to be experienced in the provision of engineering data by customers for several programmes currently in backlog and revenue for the final quarter will therefore be slightly lower than previously expected. The impact of these delays has been partially mitigated by rapid action to reduce costs and lower working capital. Headcount has been reduced by 18% at the Group's largest tooling operation during the final quarter which will generate annualised cost savings of over £1 million. A number of initiatives have also been deployed to improve operational effectiveness to world-class levels and maintain competitiveness going forward. A new global marketing campaign has been launched, senior management and certain business processes have been strengthened and preparations have been made for the implementation of SAP to provide best-in-class business systems in the first half of 2010/11.

The combined tooling backlog remains unchanged from the previous quarter end, at approximately US$130 million. A further US$305 million of potential new work remains in the quotation pipeline across a number of fixed and rotary wing programmes in the commercial, military and general aviation sectors.

The Group's composite component businesses, Texstars and CHI, have continued to perform well in the final quarter, with military aerospace demand remaining solid. New composite work has been obtained on the F/A-18 programme and Texstars has successfully qualified to tender for the supply of transparencies on a major new military programme.

In Aerospace Components and Structures, BHW has performed in line with expectations in the final quarter, benefitting from the cost reduction actions undertaken earlier in the year. Further rationalisation is planned to be undertaken in 2010/11 to eliminate existing losses of approximately £2 million and it is expected that the site will be operating profitably during the second half of that year. The cash costs of this rationalisation are not expected to exceed £1 million. The shims businesses performed strongly in the final quarter and have continued to develop new capabilities in glass fibre and other composite materials supporting the B787, A350 and CSeries programmes.

The Automotive Turbocharger business has continued to recover and performed better than expected with order book strengthening and a number of new products in prototype. The Board continues to review options for the business, which remains a non-core element of the Group's portfolio, to realise best value for shareholders.

Financing

Following approval by shareholders of the firm placing and open offer on 18 February 2010, year end net debt is expected to reduce to approximately £84 million. This includes the effect of an increase in the sterling value of the Group's dollar denominated borrowings of approximately £2 million since the half year. The Group incurred exceptionally high interest costs in the final quarter following November covenant resets. The cost of borrowing will reduce following the recent debt reduction from the first quarter of 2010/11 onwards. Interest costs for the year to 31 March 2010 are expected to be approximately £8 million, reducing to around £5.8 million in the following year.

Outlook

As reported in February, notwithstanding some positive early indications, the Board considers it appropriate to remain cautious on the short term outlook for the Group. In particular, the outcome for the year to 31 March 2011 will be dependent upon receiving strong intake in the next few months of productionable orders and no further delays in the release by customers of final design data on a number of major programmes currently in backlog. The Board continues in the meantime to focus on reducing debt and improving operational efficiency in all business units to strengthen the Group.

Recent dollar strengthening against sterling, if sustained, will benefit the Group's results going forward. The estimated benefit to trading profit* in the year to 31 March 2010 from translational foreign exchange gains is expected to be approximately £2.4 million. The translational foreign exchange benefit to trading profit in 2008/09 was £6.2 million.

The Board continues to believe that the Group is well-positioned for the medium and longer term with two global leadership positions in aerospace tooling and shims, and niche technologies in carbon composite and advanced material component manufacture in respect of which demand continues to grow.

Directorate Change

Following nearly ten year's service with Hampson, Kim Ward has informed the Board of his intention to step down as Group Chief Executive and leave the Group, with effect from 31 July 2010. During this period, Kim will be working with the Board to identify and appoint a successor and ensure a smooth transition.

Chairman Chris Geoghegan said:

"Kim leaves Hampson after a long period of dedicated service having overseen the Group's transformation into a focussed, international aerospace group with two global leadership positions. He leaves with the Board's best wishes."

Ends.

Further information:

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

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

Marylene Guernier/Ed Orlebar, M:Communications +44 (0)20 7920 2369/2323

\* Trading Profit is defined as Operating Profit before restructuring and rationalisation charges, impairment charges, changes in the net fair value of financial instruments and amortisation of intangible assets on acquisition

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 95% of the Group's sales are derived from its aerospace activities, the balance from the market for automotive turbocharger components. Hampson are world leaders in the design and manufacture of close tolerance tooling and assembly systems for composite and metallic aero structures. The Group employs approximately 1,600 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.