Metalrax has "work to do" as revenues and profits decrease
ALVECHURCH-based manufacturing group Metalrax is continuing to find trading conditions difficult. Revenues and profits were both down in the first half of the year.
Investors reacted badly to the news with the firm’s shares down more than 18% in early trading.
In its financial summary to the Stock Exchange for the 26 week period to July 1, the firm – a niche supplier of both specialist engineering and consumer durable products – reports revenues of £27.7m, a 10.8% decrease on 2011’s £31m.
Adjusted operating profit was £0.3m (2011 H1: £0.9m). In profit after taxation terms the group showed a loss of £1.2m (2011: £100,000).
The firm said both the specialist engineering and consumer durables divisions experienced very challenging conditions resulting in lower revenues.
Group gross margin was 1.8 points lower at 25.0% (2011 H1: 26.8%) which was driven by cost increases and pricing pressure within the consumer durables division.
The restructuring of George Wilkinson and the winding down of Premier Architectural Metalwork resulted in exceptional costs of £0.8m in the first half.
More positive news is that overheads were reduced by 18.4% to £4m from £4.9m in the first half as a result of cost saving initiatives across the group.
And its pension deficit has decreased by £0.1m to £3.3m.
Metalrax chairman Andrew Walker said: “The current prolonged economic uncertainty, particularly in the UK consumer durables markets, continues to affect the group both at a revenue and a profitability level.
“Whilst the specialist engineering division continues to see strong overseas demand for its products particularly from the automotive and yellow goods sectors, the group’s performance in the first half of 2012 as a whole has been below management expectations and there is still some work to do to achieve full year expectations.”
In July Metalrax announced that it had lost a key contract with supermarket giant Morrisons.
The contract – with the firm’s consumer durables division – represented 3% of Metalrax’s annual group revenue.
