Titon Regulatory News (TON)

24 Aug 2007 07:00

Titon Holdings PLC24 August 2007 Titon Holdings PLC ("Titon" or the "Company") Trading Update The Board today announces a trading update following completion of the first 10months of the current financial year ended 30 September 2007. As set out in the interim results in May 2007, the financial performance of theCompany for the first 6 months was in line with management expectations.However, during the second half of the financial year it has become clear tomanagement that the financial performance of the Company for the full year islikely to be below market expectations. Since the interim period, operating margins have been adversely impacted byincreases in raw material prices which the Company has been unable to pass on tocustomers because of difficult market conditions. Production efficiency andoverheads have also been affected by the introduction of new ventilationproducts, as a result of Building Regulation changes and then the unexpectedregulatory U-turn. Additionally, the Company has experienced lower sales toEurope along with reduced profitability in the US due to the strength ofSterling. The Directors are focused on carrying out a programme to increase market shareand reduce costs significantly in 2007/2008. As part of this process the Companyhas closed its in-house zinc die casting plant and began outsourcing thesecomponents. In order to ensure continuity of supply during the process,inventories were increased giving rise to additional production costs throughoutthe summer. The cost of closing this facility during the period has beenapproximately £50,000, however the Directors expect to see cost reductions as aresult of this action from the 2007/2008 financial year. Taking account the above factors, the Directors believe the profit before taxfor the full year will be no less than £400,000. David Ruffell, Chief Executive of Titon, commented: "Clearly the trading performance of the Company has been disappointing in thesecond half of the current financial year, principally due to higher materialcosts and the impact of the changes in Building Regulation guidance onventilation. However, the Board is focused on improving sales and margins, andon reducing costs within the business. The Company intends to updateshareholders further in the year end statement." 24 August 2007 This information is provided by RNS The company news service from the London Stock Exchange