Car manufacturing downturn damages Dyson

DYSON today warned that its second half performance was likely to fall “significantly” below expectations as a result of a drop in demand for its emissions products.

The Sheffield-based high-tech materials specialist said that although trading during the first half of the current financial year was satisfactory and that results for the six months to September 30 would be in line with expectations with an underlying pre-tax profit of £3m, it had experienced a “recent and material” reduction in demand for its Saffil and Ecoflex products as a result of the downturn in global automotive markets.

It said that as part of a strategic review to broaden and diversify its customer base, progress had been made to improve future revenues.

However, it added that under the terms of the supply agreements automotive customers varied their call-off volumes according to market demand.

“These are currently running at reduced levels, and visibility for sales during the remainder of the financial year is uncertain,” Dyson said.

“The company has already undertaken a detailed reforecast of the remainder of the year to March 31, 2009, which indicates that the performance for the second half of the current year is likely to fall significantly below the directors’ expectations.”

It continued: “The company has notified both of its banks, with whom it will now work constructively to resolve any covenant breaches that may arise in the future. The company continues to have access to adequate liquidity, and all of its borrowings are unsecured.”

Decisive cost and cash containment actions have been implemented and the directors do not expect to pay any interim dividend.

At its AGM in September Dyson told shareholders that reorganisation of the company was going well and that the group’s performance in terms of profit before tax and debt levels for the five months to August was running slightly better than anticipated.

It did warn that expectations for the second half would be “softer than the first” but that subject to uncertainties resulting from the banking crisis, the board remained confident that management expectations for the full year would be achieved.

Earlier in the year Dyson announced that it was to focus on three core market segments, namely automotive emissions, industry (ceramics, glass and steel) and energy (oil, gas, nuclear and petrochemical).

The company designs, develops and manufactures high-performance materials for a wide a range of applications and operates on a global basis.