API battles on in tough times

API, the specialist North West manufacturer of packaging products said trading conditions remain “extremely challenging” as it posted annual figures today.

The Macclesfield-based group, which is listed on AIM and has operations worldwide, is a key supplier to the consumer goods sector.

In response to weak demand API said it had cut 179 jobs or 20% of its workforce as part of a drive to cut costs by £3.8m. Group debt was reduced by £2.4m to £14.7m.

Sales in the year to March 31 were flat at £93.5m, and while operating profits showed a £100,000 improvement on the year before to £500,000, profits before tax were boosted by the sale of land in China got £8.4m and came in at  £2.2m, against a loss of £7.1m in the 18 months to March 2008.

Chairman Richard Wright said: The group has made good progress on a number of fronts despite increasingly difficult market conditions caused by the global recession.

“The businesses in Europe delivered an encouraging performance, especially in the first half, while the US was particularly hard hit by the economic downturn.”

He said despite “decisive action” on costs the company had been unable to fully mitigate the impact of higher average raw material and energy prices and deteriorating economic conditions.

API said it had operated within the covenants of its main bank facilities in the UK and negotiated an extension of those facilities to July 2010.

Looking ahead Mr Wright said: “Overall, conditions are very challenging and the group has continued to experience a year-on-year decline in volumes during the early part of the new financial year.

“Any recovery depends on an improvement in general economic activity and confidence and an end to destocking within the consumer goods supply chain.” 

On a more positive note he said because of the tough action taken by the management team the group is financially stronger and more able to withstand current economic conditions.

No dividend will be paid.