Jobs at risk as carpet manufacturer looks to close its retail business
Ossett-based Airea, a specialist floorcoverings manufacturer, is proposing to close its retail carpets business and has this morning reported group pre-tax losses of £1.5m.
Operating as Ryalux Carpets, the retail business offers broad loom carpets available through outlets. The company will be entering into a formal consultation period with around 50 employees about the proposal and said it is exploring opportunities for some employees to transfer to other parts of the group.
Airea also posted its results for the 18 months to 31 December 2017 this morning, which showed the group made a pre-tax loss of £1.5m on revenues of £36m. This is down from reporting pre-tax profits of £2m in 2016 on revenues of £24m.
In the 18 months to 31 December 2017, Ryalux Carpets generated pre-tax losses of £4.8m on revenue of £9.9m. The company had incurred exceptional costs of £1.7m, inclusive of £1.1m of asset impairment and provisions, which it said was associated largely with a reduction in working capital and impairment of assets.
Airea said: “The closure proposal follows a period of significant loss making despite the implementation of a range of initiatives to improve business performance including new product development, site rationalisations and strict cost and working capital controls. The trading environment for residential carpets has worsened and the ongoing trend to cheaper synthetic products has led to further declines in demand for high quality wool carpets.”
The closure is anticipated to be completed by 30 April 2018 and is likely to be cash generative. Proceeds will be distributed to shareholders.
Airea said that the contract flooring business, which accounted for 74% of group turnover, operating under the Burmatex brand continued to be highly profitable and cash generative. It said it planned to accelerate its investment into the development and growth of the Burmatex business.
“This fits with the Company’s strategy of focusing investment behind profitable product niches to drive long term market growth and value within the commercial flooring sector,” Airea added.
In this morning’s results announcement, Airea said its export sales had seen a growth of 58 % over last six months following entry into new geographical markets, strengthening of international dealer network and successful launch of new products.
The company’s accounting reference date has been changed to 31 December, leading to reporting on an 18 month period.
