API to dive into the red

PACKAGING firm API today warned it will dive into the red this year as the recession begins to hit the group hard.

Poynton-based API said it has axed around 20 staff – or 10% of its workforce – and is looking at further cost reductions to help it survive the downturn.

However it added that recent changes in exchange rates, in particular the weakening of Sterling against the Euro, will have a net favourable impact on margins in the coming months.

In November the group, which also has a site at Salford, celebrated swinging back into profit and said demand for new products, including recyclable laminate packaging, was buoyant, however chief executive Andrew Turner warned about the potential impact of the economic downturn.

Today in statement about its full year results to March 31, the group said: “After reviewing performance in the third quarter and the outlook for the remainder of the financial year, the board has reduced its expectations.

“In line with many other manufacturers in the current economic climate, the group is experiencing a significant reduction in demand. Full year revenues are now expected to show a year-on-year decline of approximately 3% at constant exchange rates.

“Whilst the group is still forecasting to report a trading profit from continuing operations, it now expects to report a pre-exceptional loss before tax for the full year. The business is continuing to operate within its banking covenants.”