Andrews Sykes feels the chill of recession

BLACK Country support services specialist Andrews Sykes has seen its full year normalised operating profit decline by £5m as the recession impacted severely on its core markets.

The Wolverhampton firm, which supplies air conditioning, pumps and cold storage solutions, saw the figure slip from £17.9m in 2008 to £12.9m last year.

The company said the figures looked harsh as 2008 had been a record year for the firm. It said its current performance was broadly comparative with 2007 as it looked for recovering growth.

Chairman Jacques Murray said that although trading had been difficult, the company had reigned in costs and had had reduced its net debt from £16.9m at the end of 2008 to £2.8m by the end of December.

In addition, it said group stock levels had been reduced by £3.1m, capital expenditure had been carefully controlled and efficiency improvements made to the hire fleet.

Cost control was achieved mainly though efficiency savings and this had had no adverse impact on the operational structure of the business, it said.

Although some redundancies were necessary no depots were closed and it said customer service levels had been maintained.

In a statement to the London Stock Exchange, the company said: “The group remains in a strong position ready to take advantage of any business opportunities whenever they arise.”
 
The performance of its main hire and sales business in the UK and Northern Europe was adversely affected by recession.

However, the effect was mitigated by the development of niche markets together with continuing investment in traditional businesses, a strategy the company said would continue.

The Middle East hire and sales business fared well, enjoying record operating profits following on from the previous record set in 2008 – this despite the economic downturn in the second half of last year.

However, it warned current conditions in the region remained difficult and it was therefore unlikely to achieve similar trading levels this year.

The UK-based air conditioning installation business had a better year, turning an operating loss of £0.1m into a profit of a similar amount.  

It said the operation had benefited from reduced costs and similar restraint would be shown this year.

Despite the decline in normalised operating profit, net profit after tax increased by £0.5m to £11.6m, a new record for the group.

In outlook, the group said its strategy of investing in its traditional core products and services would continue along with, an increase in non-seasonal business and investment in new technically advanced and environmentally friendly products.

“The group continues to face a difficult operating environment in all of its geographical markets, particularly the Middle East, and therefore 2010 will be challenging,” said Mr Murray in today’s statement.

“Nevertheless the business is strong, the infrastructure remains fully in place with a hire fleet that has been well maintained and is in excellent condition. The board is therefore optimistic for further success in 2010.”