Global slump hits 600 Group
CONTRACTION in global markets, raw material costs and overseas closures has led to Britain’s largest toolmaker 600 Group announcing pre-tax losses of £1m.
Announcing its interim results for the 26 weeks ended September 27 the Yorkshire-based manufacturer said that a combination of factors had led to it recording the loss compared to a pre-tax profit of £1.6m for the same period in 2007.
600 said that its continental European and South African markets had experienced “reasonable growth”, but that sales in the UK and North America had showed continued weakness.
Order intake activity in the first half of the year continued at similar levels to last year although the group admitted that its outstanding order book is currently lower compared to the same period last year and a further contraction in global markets is expected.
Overall sales for the half year increased by 10% to £45m (2007: £41m). However, after adjustment for the benefit of a major aerospace contract undertaken during the first half underlying sales were marginally lower year-on-year.
Other operating income included the benefit of £0.3m in respect of the sale and leaseback of 600’s Colchester and Halifax properties.
Net operating expenses increased by £0.6m, as compared to the first half of 2007, as a result of the group’s investment in product design and development.
Operating profit for the period, before exceptional costs of £1.2m, was £0.1m (2007: £0.6m).
Earlier this year the group announced a programme of 70 redundancies at a cost of £900,000 and the closure of sales operations in the Czech Republic, Singapore and Malaysia at a cost of £300,000. Sales activity from the closed operations have now been transferred. The group’s Canadian operation has also been shut down.
The basic and diluted earnings per share for continuing operations was (1.7)p (2007: 1.9p) and (0.8)p (2007: (0.3)p) for discontinued operations.
In recognition of falling demand as a result of the current global downturn 600 said that it was increasing it focus on short-term operational and working capital improvements.
A detailed review of the group’s operations has been conducted and actions already implemented.
Around 45 jobs are to be lost in its UK and North American operations – on top of the closure of 600’s Leeds headquarters and the closure of four sales offices in the US.
“While the company is not dependent upon any particular territory or market, it is not fully insulated from the global economic uncertainties that are impacting demand within the whole of the engineering industry,” it said.
“Subsequent to the half year-end the group has experienced a reduction in the volume of orders for its machine tools although, as commented above, we entered the period with a similar level of orders to last year.”
It continued: “We will continue to implement the company’s strategy in all its major markets while at the same time undertaking the actions identified to improve our operational efficiencies, supply chain and customer service.”
