Coral Products doubles in size as acquisitions boost profits
Plastics manufacturer Coral Products has integrated new acquisitions and nearly doubled profits at the Wythenshawe headquartered plastics group.
In his chairman’s statement to the stock market this morning Joe Grimmond said trading has been strong and is running ahead of the upgraded market update the company issued in May 2023 and pre-tax profits are 9.6% ahead of that forecast.
Trading during the year shows revenues of £35,216,000 (2022: £14,391,000), gross margins of 29.7% (2022: 36.7%) resulting in a gross profit of £10,476,000 (2022: £5,287,000). Underlying EBITDA was £3,882,000 (2022: £1,779,000) and underlying operating profits increased to £2,713,000 (2022: £1,574,000).
Grimmond said the change in gross margin reflects the changes in sales mix from the acquisitions during the year.
Coral has invested £11,571,000 in new subsidiaries but claims the gearing remains comfortable at 50.7%. A further £2m is being invested in machinery at Tatra Rotalac in Wythenshawe.
“The balance sheet net asset position is strong at £13,848,000 (2022: £11,707,000). This represents a solid asset platform for developing the business,” he said.
A new banking facility with Virgin Money has given Coral £10.35 million comprising £7.35 million for invoice financing and £3 million for trade financing. In addition, the Group has re-mortgaged the freehold buildings acquired with Film & Foil Solutions and Alma Products for a combined £2.1 million which after repaying existing mortgages improved the Group’s working capital position by circa £1.4 million.
Grimmond said: “The business is stable, cash generative and backed by a solid balance sheet.
“The four acquisitions have integrated well. Each is a specialist plastics business based in the North West of the UK. We are confident there is scope to improve the performance of each business acquired and potential to collaborate across the Group. An example of this is the recent decision to merge Customised Packaging Limited into Manplas Limited, two very similar businesses offering customised product protection solutions. The combination of these businesses will create several synergies, together with an improved customer offer.
“As ever, the Group is dedicated to moving towards more sustainable solutions where it is commercially viable to do so and during the year under review, good progress was made towards reaching our sustainability goals.”
He said the company strategy is to build a UK plastics business of scale and said the acquisition of four businesses during the financial year had been successful:
Film & Foil Solutions acquired in May 2022 is a converter and stockist of flexible packaging film, print lamination film and speciality plastics.
Alma Products also acquired in May 2022, is a niche specialist and expert in extrusion, thermoforming and container printing serving the food industry, providing formable plastic sheet for Form-Fill-Seal applications, thermoformed and printed plastic food packaging.
Manplas Limited acquired in September 2022, is a provider of customised product protection solutions solving logistical problems across multiple sectors with premises that adjoin our largest subsidiary Tatra Rotalac.
Ecodeck Grids Limited acquired in October 2022, e-commerce led business selling plastic grids with potential to take the manufacture of the grids in-house. In June 2023, the Group acquired a small business which gives the Group a foothold in Spain for the sale and distribution of Ecodeck Grids.
“All four acquisitions are specialist design and product led plastics businesses based in the North West of the UK and all are now fully integrated into the Group and performing well, he said.
Grimmond added: “It is important to highlight that the existing companies also performed well in the period and it is the combination of both that has delivered the positive trading performance for the year. In particular, Tatra Rotalac Limited had a good year with increases in both turnover and operating profit. The operational efficiencies implemented during the previous year continue to pay off and this, combined with the £2 million capital investment into new machinery, will deliver during the next financial year.”