Fear for jobs as Metalrax heads into administration

WELL-known Midlands manufacturing firm Metalrax is to enter administration, putting hundreds of jobs at risk.

Following an announcement to the Stock Exchange this morning the firm’s shares have been suspended on AIM.

Alvechurch-based Metalrax – a niche supplier of specialist engineering and consumer durable products such as bakeware – said challenging trading and lack of funding were the drivers behind its planned appointment of KPMG as administrator and the suspension of its shares.

The group has been struggling more than six months and has tried to cut costs  – last summer its consumer durables division lost a major contract with Morrisons.

In a statement Metalrax said: “Trading has been particularly difficult in the consumer durables division, particularly in light of the major contract loss announced on July 31 last year and results in this division have been materially below expectations.

“As a result, the sales volumes of the consumer durables division have fallen below expectations. Consequently the group’s funding availability, which is linked to the sales volumes and represents a large proportion of the group’s overall financing, has been significantly lower than expected.”

“The group is now experiencing significantly worsening working capital. Although the directors have sought further financing to allow the company to continue trading, such financing has not been forthcoming. It has therefore become evident that the only course of action available for the board is to place Metalrax and certain of its subsidiaries into administration.”

In September Metalrax reported to the Stock Market that it was continuing to find trading conditions difficult. Revenues and profits were both down in the first half of 2012.

Investors reacted badly to the news with the firm’s shares down more than 18% in early trading on the day of the announcement.

Click here to sign up to receive our new South West business news...
Close