Plastics firm, Coral, confident following latest investments in growth
Manchester-based plastics specialist, Coral Products, has seen sales and profits in the first half decline, but says it is on course with its year end earnings targets.
The firm recorded revenues of £17.2m in the six months to October 31, 2023, a 2.27% fall on the previous year’s sales, and pre-tax profits declined by 6.6% from £894,000 to £836,000. However, the interim dividend remains unchanged at 0.50p per share.
Coral said the lower revenues reflect the decision to pull back from lower margin business lines balanced against organic growth and full contributions from the Manplas and Ecodeck businesses acquired in September and October 2022.
It said it is benefiting from the focus on higher margin products shown in a 25% increase in gross profit.
Cash and cash equivalents were £2.9m as at October 31, 2023, down from £3.8m a year ago, after paying £1.3m for the earnout payment for Alma in July 2023.
The business said its overall net asset position remains strong.
During the reporting period the group made a £500,000 investment in key machinery which is already in action and expected to boost sales and earnings over the second half.
Looking ahead, Coral said, while the market remains challenging, the group is well positioned to meet targets for the year.
It said its investments in new machinery, together with the existing orderbook, will continue to drive growth in the near to medium term.
Post balance sheet, the group completed the appointment of a new group chief executive, with Lance Burn set to take up the role from January 2, 2024. He joins from IG Design Group where he has been an executive board director since 2012.
As part of the management change, Joe Grimmond will move from being executive to non-executive chairman.
He said: “These results are pleasing as they show our ability to successfully bed down the four acquisitions we made in 2022, which doubled the size of our business, as well as weed out lower margin business lines.
“As a result of these changes, we remain on track with our year end earnings targets.
“Our overall objective remains to build a specialist UK plastics business of scale, targeting profitable, high-demand sectors. To this end, we maintained sales whilst substantially improving gross margins.”
He added: “Key to future growth is the investment we have made and continue to make in new machinery positioning us to win new contracts and expand upon existing relationships. Overall markets are challenging currently, nevertheless, we are confident the business remains well placed.”
