New CEO at Flowtech as job cuts and stalled web plan mark disappointing results

Skelmersdale-based hydraulics business Flowtech Fluidpower has reported increased revenues of £114.8m (2021: £109.1m) but expects to make a loss of £5.6million.

The stock market quoted business has also reduced its workforce by 10%, said chairman Roger McDowell. “We have been able to gradually reduce headcount by approaching 10% over recent months, with the continued consolidation of warehouse activities into our Skelmersdale campus a highlight, now added to by our new Engineering Modification Centre, with both providing a sound base for managing future growth.”

Reporting unaudited results this morning (12 April) McDowell said the delay to the new web offer was ‘disappointing’ as was the financial performance which he has acknowledged has taken a ‘step back’.

The revenue results were in line with expectations announced to the market in January but the move into a financial loss was not.

The company has also closed a Leicester warehouse facility with effect from 31 December 2022 and legal and property advisors are working with a prospective new tenant who will allow the company to exit from the remaining lease liability in full in the first half of 2023.

The Leicester site employed 21 staff in warehousing roles, and covers c.40,000 square feet. All stock was moved to Skelmersdale, with picking activities fully integrated and the business has also taken on additional space at a second location nearby.

Striking an upbeat tone, McDowell said improvements can be made. “With the ability to now ensure all aspects of the change become the ‘new normal’, our focus is on ensuring this clearly significant group asset returns to growth, particularly with the enhancements from our digital investment.”

The consolidation work in the Flowtech division were achieved, he said, both commercially and operationally.

However, “there may be short term risk to the customer experience whilst managing an extensive change process, it was disappointing that financial performance took a step back.”

He added: “Whilst it has been disappointing that the introduction of our new web capabilities was delayed, the lessons we have learned through the process will be invaluable and will help guide our next steps as we seek to enhance functionality to drive up conversion rates, and take advantage as SEO rankings gradually improve. We are confident we will have a class leading offering, with a growing influence on our profitability, also backed up by a more progressive ‘data-driven’ approach than we have historically been able to use in business development.”

There’s also a change at the top. Bryce Brooks has, after 13 years with the business, taken the decision to step down as chief executive and leave the company.

Mike England has been appointed the group chief executive and joins the PLC board. England was most recently the group chief operating officer of RS Group plc. “We believe that this, coupled with Mike’s broad commercial experience, scale and knowledge will provide the next phase of leadership and expertise for Flowtech to realise the Group’s ambitious plans over the coming years,” McDowell said.

The unaudited results show revenue of £114.8m (2021: £109.1m), £5.7m (5.2%) up on 2021.  Separately disclosed items of £13.0m include a £10.1m impairment of goodwill, £1.4m restructuring costs largely relating to the exit from the Leicester Logistics Centre and £0.9m amortisation of intangibles. After taking account of the separately disclosed items the loss before tax was £5.6m.

McDowell concluded: “A year ago we believed that by the end of 2022 most of the key components of our strategic plan would be in place and providing solid foundations to move forward and unlock our undoubted growth potential. Whilst we again face macro-economic challenges that may suppress growth in the short term, we continue to focus on reducing costs where sensible to do so, and now seek to consolidate the commercial and operational changes we have made to improve customer service, and grow market share. We have entered 2023 with much of the strategic building blocks in place after an array of challenges over the past three years, and we will remain focused on completing the remaining actions of our strategic plan. With global supply chains now more consistent, we can reduce inventories to match our needs and return to generating strong cashflows to support our investment activities, whilst exploiting our new digital capabilities.”

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