3rd Sep 2014 07:19
LONDON (Alliance News) - API Group PLC said Wednesday that it has downgraded its expectations as lower customer demand in its Foils America business continued into the current financial year with the division now expected to post a loss for the full-year.
The manufacturer of specialist foils and packaging materials said that its Foils Americas business has been impacted by a drop in demand from customers in the metallic pigment sector, which hit results in the second-half of last financial year and has continued into the current financial year.
"The duration and severity of the down-turn has been greater than expected, albeit a recovery is now getting under way," said the company, which as a consequence, now anticipates that the unit will post a small loss for the year.
AIM-listed API Group said group expectations are being downgraded, with both first-half and full-year results behind those reported the previous year. In a trading update the company said the elimination of losses in its Holographics in the prior year is "proving insufficient to compensate for the significant profit shortfall at Foils Americas."
The company said its Laminates and Foils Europe businesses are trading broadly in line with 2013, and noted that Holographics has consolidated its breakeven position established in the final quarter of last year. Looking ahead API said that good prospects for a return to profitability remain, based on its improving business development pipeline.
Beyond the full-year, API said its results are expected to benefit from a recovery in sales and revenue in its Foils American and Holographics units, as well as growth and profit improvement opportunities associated with its ongoing capital investment programme coming to fruition.
The news comes just over a month after household and personal-care products company McBride PLC recruited its finance director, Chris Smith, to be its new chief finance officer. Smith helped turnaround the business since joining the foils and packaging material manufacturer in 2008.
In June API Group declared its first final dividend in more than a decade after ending its last financial year in a net cash position for the first time in 15 years, paying a 1.3 pence final dividend, adding to its 0.7 pence interim dividend, after ending the year with GBP200,000 in net cash, compared with GBP2.6 million in net debt a year earlier.
The return to a net cash position came as API reported a GBP400,000 increase in operational cash flow, to GBP9.0 million, and a net cash inflow of GBP2.8 million.
Shares in API Group were Wednesday trading 10.91% lower at 61.47 pence per share shortly after the market open, the second biggest faller on AIM.
By Alice Attwood; [email protected]; @AliceAtAlliance
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