Operating profits down as plastics manufacturer faces £5m in exceptional costs

Technical plastic manufacturer Carclo saw an 11.6% increase in full-year revenues to £143.4m, though operating profit dropped sharply to £1.2m due to nearly £5m in exceptional costs.

Those costs included £3.4m in rationalisation costs and £900,000 from cancellation of a future supply contract, the firm told the London Stock Exchange this morning. Underlying operating profit was £5.9m, just shy of the previous year’s £6.1m.

In March the Ossett firm said it had reached an agreement with a customer who cancelled a £15m contract in late 2022, causing it to issue a profit warning in December.

The board said it had optimised resources during the year, improving efficiency, and strengthened relationships with strategic partners. It had also embraced sustainability, launching initiative to reduce waste, increase energy efficiency and increase community involvement. It had joined sustainable procurement service EcoVadis to strengthen supply chain sustainability.

Chief executive Frank Doorenbosch said, “This year has undoubtedly presented Carclo with its fair share of challenges, testing our mettle and resilience. However, I am proud to say that we have risen above these obstacles and proven our ability to adapt and thrive in a dynamic and evolving business landscape. Despite the headwinds of inflation, rising interest rates, and other economic challenges, our unwavering commitment to excellence has enabled us to achieve a slight increase in revenue, reaching £143.4 million, an increase of 11.6% on the prior year and 3.8% at a constant currency rate.

“Our success can be attributed to our strategic approach, which includes agile pricing adjustments to mitigate the impact of inflation and energy surcharges. Furthermore, our commitment to operational excellence has been exemplified through the implementation of factory specialisation measures, allowing us to enhance efficiency, streamline processes, and optimise our performance across our diverse range of offerings, including design and engineering and manufacturing solutions.”

Doorenbosch said he was confident and optimistic for the firm’s future.  “Our strategy, centered around factory specialisation, process standardisation, operational excellence, financial stability, and sustainability, positions us for continued success.”