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3 Feb 2009 07:00
3 February 2009
The 600 Group PLC
Interim Management Statement & Restructuring Update
The 600 Group PLC ("600 Group" or the "Group"), the manufacturer and distributor of precision engineering products to international markets, today announces its Interim Management Statement for the period from 28 September 2008 to 31 January 2009 (the "Period") and an update on its restructuring programme.
As highlighted in the Chairman's statement in the interim announcement on 25 November 2008, the Group experienced a reduction in the volume of orders for its machine tools subsequent to the half year end. This trend continued throughout the Period, impacting revenues in the UK and North American markets and the profitability in the machine tools business. For the Period as a whole Group sales, after adjustment for currency movements, reduced by 16% compared to the same period last year. Overall gross margins also deteriorated during the Period, predominantly as a result of exchange rate movements.
As a result, the Board now expects that the Group will report an operating loss for the full year. There will also be a number of one off costs incurred during the remainder of the year associated with the restructuring detailed below.
David Norman, the Group's new Chief Executive, has completed a detailed review of all of the Group's operations. A full restructuring of the business, centred on the delivery of substantial cost reductions through the development of production efficiencies and the elimination of instances of duplicated resources across the Group together with the consolidation of certain business units, is now in progress.
The key elements of the restructuring project, which has gained momentum throughout the Period, are to:
The Board expects the restructuring exercise to deliver annualised cost savings and other benefits in excess of £5.0 million. This will, regrettably, involve a further considerable reduction in headcount across the Group of approximately 110 people.
The associated exceptional costs of this restructuring are expected to be approximately £1.9 million, most of which will be incurred in the current financial year. It is expected that the restructuring of the Group will be completed within the next six months and that cost-base benefits will be delivered during the year ending 27 March 2010.
David Norman said: "I have fully reviewed the Group's operations and, whilst the fundamentals of the business are sound, considerable action is required, in current circumstances, to improve the performance of the Group and enhance shareholder value. The short-term impact of the restructuring is painful but necessary. Our actions will create a group that is well positioned to deliver growth, with improved margins, through a more robust supply chain and an effective market facing structure. The restructured organisation will be able to respond quickly to future market opportunities both in terms of organic growth and strategic development where our criteria for value and earnings enhancement are met."
Enquiries:
The 600 Group PLC Telephone: 0113 277 6100
David Norman, Group Chief Executive
Martyn Wakeman, Group Finance Director
Altium Telephone: 020 7484 4040
Ben Thorne
Tim Richardson
Hudson Sandler Telephone: 020 7796 4133
Nick Lyon
Wendy Baker
Notes to Editors:
The 600 Group PLC is an international group, manufacturing and marketing machine tools, machine tool accessories, lasers and other engineering products.
The Group operate from some 20 locations world-wide and sell its products around the world. Its international marketing and distribution network handles both Group products and those of other manufacturers.
Website: www.600group.com
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