Engineering group confident of current year forecasts

Avingtrans, the parent company of Bolton engineering company Booth Industries, says it expects to meet original forecasts for the financial year ending May 31, 2020.

However, it has announced a series of measures to protect the international group from the impact of the coronavirus.

Avingtrans acquired Booth from administration last June in a £1.8m deal, saving around 100 jobs.

Booth Industries was founded in 1873 and was originally a blacksmith. It has been making blast doors for the past 40 years.

Today’s group update said that, despite the widespread disruption caused by the pandemic, due to its mitigation actions, the group believes that the year ending May 31, will be broadly in line with previous management expectations for revenue and profit and its net debt is expected to be no greater than previous guidance.

Given the unprecedented uncertainly around the impact of COVID-19 however, it is not yet possible to assess with certainty the impact this will have on the group’s financial performance for the next financial year.

As such, the group is withdrawing its previous guidance for the year ending May 30, 2021.

It said that, due to its diversity the group is resilient and in a better position than most to weather the current storm, adding: “We may well find ourselves in a strong position to capitalise on the new world order which emerges, as the crisis passes.”

Chief executive Steve McQuillan said: “We are all experiencing an unprecedented situation.

“Our top priority is the health and well-being of our people, clients and suppliers, and ensuring that we take the decisive actions necessary to protect the group long-term.

“Both myself and the board wish to express our thanks to all our employees for their flexibility and resilience during this crisis, which has allowed Avingtrans to continue operating effectively and provide essential support to our clients during this extraordinary period.”

He added: “Our business model is robust, with strong competitive positions in our markets and differentiated value propositions, which are appreciated by our customers.

“Indeed, the group has been designated a critical supplier by government departments in the UK and USA, meaning that Avingtrans is playing an important role in responding to the COVID-19 crisis.

“However, very few businesses are immune to the current turmoil, so we have taken decisive action in response to the pandemic to reduce costs, bolster our competitiveness and preserve our strong balance sheet.”

Actions taken so far include reducing near-term business costs by making appropriate use of UK and US government stimulus programmes, to maintain employment and capability.

It has conserved cash and liquidity, including the deferral of expected non-critical capex spend, and reconfigured its activities to support specific customers, at their request, in the critical national, or international interest

Approximately 30% of staff are now working from home.

Business activity continues at most of sites, with some 45% of staff still able to work safely in the group’s factories.

It said: “Therefore, 75% of our employees are able to perform their duties ‘normally’.

“However, business progress is being hampered by supply chain disruptions, travel restrictions and government-enforced lockdowns in the UK, USA and India.

“As a result, 20% of our employees, mainly in the UK, have been furloughed at present.”

Actions taken to reduce costs include cancelling all upcoming executive annual bonuses and pay increases, reducing the salaries of the board by 20% from May 1, 2020, while salaries of senior management and other employees are being kept under review, as the situation evolves.

Avingtrans said it has a modest level of debt and secured facilities with its banks.

The group’s net debt position has not moved materially since the interim results were announced in February. However, it said it must maintain its strong balance sheet and liquidity, position.

As at March 31, 2020, the group had headroom in its facilities of more than £8m, adding that it has strong, long-term relationships with its banks, who have indicated their on-going support.

However, the board said it believes it is prudent to utilise government stimulus programmes where available to support ongoing employment costs in the short term and to avoid redundancies and maintain capability.

It is deferring non-critical capital expenditure for six months, including the Booth building extension. With the agreement of banking partners it is taking a capital repayment holiday for three months, and it is continuing to seek on-time stage payments from key customers to support working capital,

It added: “Notwithstanding the generally robust trading position and the group’s strong balance sheet, the macro economic environment is one of heightened uncertainty.

“After due consideration, the board has decided to cancel the interim dividend for the six months ended November 30, 2019.

“The board recognises the importance of dividends to shareholders and, as such, it intends to consider the appropriateness, quantum and timing of a dividend payment relating to the financial year ended May 30, 2020 when it has a clearer view of the effects of COVID-19 on the group’s business.”