Last checked at 1 Mar 2018 07:00
1 March 2018
Plastics Capital plc
("Plastics Capital" or the "Group")
Trading Update
Plastics Capital (AIM: PLA), the niche plastics products group, announces that it expects results for the full year ending 31 March 2018 to be marginally below current market expectations in terms of Sales and adjusted EBITDA.
Organic sales growth in H2 FY17-18 has continued to be very strong. Films Division sales growth has been exceptional, benefitting from the recent investments we have made in increasing capacity and new capabilities. Growth in the Industrial Division, particularly our bearings business, has improved but remains weaker than we expected when we reported at the interim stage. This largely represents a slower than expected pick-up in sales on certain large bearings contracts. With the benefit of hindsight, it seems that sales made on these contracts towards the end of FY16-17 were particularly high due to pipeline filling by customers and are unlikely to be sustained this financial year.
Taken as a whole, we expect to report that profitability has improved significantly from that reported in H1, with adjusted EBITDA expected to be approaching double that generated in H1. Two factors account for this; firstly, Films Division profitability has benefitted from the strong growth in sales which started in Q2 and secondly, sales have picked-up, although modestly, in the bearings business where operational gearing is significant. However, because of the difference in operational gearing between the Films Division and the Industrial Division, higher sales than expected in the Films Division are not expected to not make up for lower sales than expected in the higher margin Industrial Division.
Commenting, Faisal Rahmatallah, Executive Chairman, said: "We continue to see very strong sales growth particularly in the Films Division, which has traditionally been our steadiest business area. Our bearings business is picking up more slowly than we expected, and this will impact this year's results. However, the overall rate of travel of sales and profits growth across the entire Group is good and the Board believes profitability will follow sales as investments we have made over the last two years bed down."
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
For further information, please contact:
Plastics Capital plc | Tel: 020 7978 0574 |
Faisal Rahmatallah, Executive Chairman | |
Nick Ball, Finance Director | |
Cenkos Securities | Tel: 020 7397 8900 |
(Nomad and joint broker) | |
Mark Connelly | |
Callum Davidson | |
Allenby Capital Limited | Tel: 020 3328 5656 |
(Joint broker) | |
David Hart | |
Katrina Perez | |
Notes to Editors
Plastics Capital is a niche manufacturer of specialist plastic products. Applications for these products vary widely and examples include:
· Packaging for the food manufacturing and distribution - films, sacks and pouches
· Steering columns and instrument control knobs in the automotive industry - plastic ball bearings
· Hydraulic and industrial rubber hose manufacture - various types of plastic mandrel
· Cardboard box manufacture - plastic creasing matrices
Plastics Capital's business model is based on understanding customers' problems in depth, and then developing and mass producing proprietary, technical solutions for these problems.
The business operates through two divisions, Films and Industrial, and has the majority of its production in five UK based factories, with a further three factories in Asia. Approximately 50% of its £75 million sales are made outside the UK to more than 80 countries.
Further information can be found on www.plasticscapital.com