Weak UK demand hits manufacturer’s revenues

Tube manipulation specialist Tricorn, which issued a profit warning in October, has reported a fall in half year revenue as it said demand in the UK slowed “significantly” through the second quarter.

For the six months to the end of September, the Malvern-based AIM listed company reported a 7.3% drop in revenue to £10.5m, down from £11.4m.

Profit before tax for the period was £280,000, falling from £530,000 in the prior year period with lower distribution and administration costs helping to partially offset the impact of lower revenue.

Tricorn said demand in the USA remained broadly in line with expectations, but the US operation did see some short-term pressure on margins due to the impact of increased import tariffs on goods sourced from China and a change in product mix.

Andrew Moss, chairman of Tricorn, said: “Whilst demand in the USA remained broadly in line with expectations, demand in the UK slowed significantly through the second quarter resulting in revenue for the group being down on the comparable period.  In line with the trading update released on 9 October 2019, profitability in the period was adversely impacted by lower revenues and in the USA short-term pressure on margins due to the impact of increased import tariffs on goods sourced from China.

“Our Chinese joint venture performed in line with the Board’s expectations and I am pleased to report that it declared a maiden dividend with the group’s share, (£0.171m; 2018: £Nil), being received shortly after the end of the period.

“We are very pleased with the performance of the new paint plant in the USA that we announced in May. It was operational ahead of time and is generating a number of new opportunities. Furthermore our pipeline of new business opportunities across the group remains healthy.”

Looking ahead, Moss said: “For the balance of the financial year we expect demand to remain low in the UK and to weaken in the USA. We continue to focus on managing our cost base and working capital to align with these lower volumes whilst capitalising on the many new business opportunities referred to above.”