Metalrax returns to profit after four years
SPECIALIST engineering and consumer durables group Metalrax has returned to profits for the first time since 2006.
The Birmingham based group has converted an £10.6m pre-tax loss this time last year into a £1.9m profit. After tax the profit figure is £0.3m. The figures are based on a 7.1% increase in revenues from £62.9m in 2009 to £65.5m last year.
Basic earnings per share grew to 0.29p compared with a loss of 9.62p last year, while net debt reduced from £12.2m to £8.3m.
Andrew Walker, Metalrax chairman, said: “The board is encouraged by last year’s performance and believes the group is in a good position to further grow profitability in 2011. The group’s order books have continued to strengthen and should support this year’s growth.”
The figures, which are ahead of market expectations, reflect a return to profit in the second half, supported by growing sales.
Gross margins improved year on year by 2% to 25.8% from continuing activities, mainly arising from manufacturing efficiencies and reduced costs.
The group said it had been through a turbulent period since 2006, a period which has seen Metalrax restructure itself. This has involved disposing of high volume, low margin manufacturing operations and refocusing the group into two divisions to concentrate on high growth markets.
During the year, the group completed the disposal of Hidrosib, its Romanian subsidiary, as well as a number of vacant properties. It also completed the sale and leaseback of two properties. Since year-end, a further property has been the subject of a sale and leaseback arrangement.
The board said it believed that reducing the group’s debt was imperative and with that objective it had embarked on the property sale and leaseback plan despite the longer term lease liabilities. With this in place, the board said the group could generate better long term returns with the headroom generated by the debt repayment.
In outlook, it said last year’s performance had been encouraging and the board believed the group was in a good position to further grow revenues profitably in 2011. Order books are strengthening over 2010 and these should drive this year’s growth, it added.
“Taking this into account the board expects to meet market expectations in the current year,” it said in its results statement.
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