Profits dip at Ryalux Carpets’ parent

CARPET manufacturer Airea has seen half-year profits dip but today said it was confident about its future prospects despite uncertainty over future trading conditions.

The group behind Bury-based Ryalux Carpets said conditions remained “depressed” in many of the markets in which it operates.

Around 130 people work at the Bury operation which focuses on the residential product and supplies Allied Carpets and independent retailers.

In a statement chief executive Neil Rylance said: “The business has faced and indeed continues to face a volatile trading environment with a mix of erratic demand and raw material inflation.”

Yorkshire-based Airea, which produces carpets for both residential and contract markets, said residential sector sales had been hit by “an extremely weak” performance on the high street.

“But we remain encouraged by progress in the sales of new products and the winning of new business with a major multiple retailer, which should start to come on stream in our fourth quarter,” Mr Rylance added.

He said raw material price inflation had become a “major factor” in the running of Airea, and that selling prices had to be managed carefully to protect margins.

The company said business wins in new contract markets had “cushioned the dip” in general maintenance and refurbishment work.

On the future prospects for the business, he said: “The trading environment remains challenging especially in the residential sector with consumer confidence weakening in the face of an increasing tax burden, government cuts and fears over job security. 

“We have yet to see how changes in government expenditure will impact demand for floor-coverings in the public sector markets that we serve.

“Increasing raw material prices resulting from commodity price inflation only add to the challenges we face but so far we have been able to pass on appropriate price increases to the market.  

“On a more optimistic note against this backdrop of difficult trading conditions we continue to demonstrate our ability to
manage costs.”

For the six months ended December 31, sales dropped to £15.1m from £16.7m over the same period the previous year. 

Pre-tax profits fell from £515,000 to £189,000 while operating profit before exceptional items was £514,000, down from £757,000.).

Mr Rylance said Airea was debt free with a strong balance sheet and said its Poland-based operation, Burmatex Sp z.o.o., had achieved sales growth of 50% in that market. 

Airea is not paying an interim dividend.