Redundancies made by tap manufacturer as orders dry up
Tap manufacturer Samuel Heath & Sons has been forced to make redundancies after seeing a drop in orders since June.
The Birmingham-based business said in a half-year update that “trading conditions have worsened materially” and the order book has been “running consistently below management budget”.
To reduce costs and improve efficiency, 10 redundancies were made by the manufacturer which totalled 7% of its workforce.
Bosses do not anticipate that conditions will improve this calendar year in the UK and EU markets, however, they are seeing continuing confidence in the USA but feel “there is no guarantee that this will continue”.
Weak sales at the beginning of the period were offset by some recovery towards the end of the half, resulting in sales of £7.78m – a 3% increase in the six months to September 30.
However, the firm says that this was only made possible by an improvement in production efficiency, as output was restored to the previous year’s levels and so ‘catching up’ the historical order book. The order book is now much weaker than the prior year.
Operating profit was £441k compared to £610k in the previous year. The main cost increases driving this reduction were a 37% increase in energy and utility costs, additional spending on tooling, and payroll growth from rate increases and recruiting to fill vacant skilled labour vacancies.
Anthony Buttanshaw, chair of Samuel Heath & Sons shared frustrations at delays in receiving regulatory approval in overseas markets.
He anticipates the second half of the year will record a loss after redundancy costs, “unless there is some improvement in sales and the markets”.
Buttanshaw said: “The directors are hopeful of remaining in the black for the year as a whole and that sales will recover early in the new calendar year”.