22nd Sep 2015 14:19
LONDON (Alliance News) - Braime (TF & JH) (Holdings) PLC Tuesday reported a small fall in profit in the first half of 2015 and the company said there is an "urgent need" for productivity improvements in its UK business.
The manufacturer of metal presswork and distributor of bulk material handling components reported a small fall in pretax profit in the first six months of 2015 to GBP406,175 from GBP512,854 a year earlier despite revenue rising to GBP13.5 million from GBP12.1 million.
Profit fell as its gross margin was squeezed as raw material, employee benefit expense, depreciation and other costs rose in the period, leading to its gross profit falling to GBP439,060 from GBP568,443.
Braime kept its interim dividend flat year-on-year at 2.90 pence per share.
Braime Pressings Ltd, its metal presswork subsidiary, experienced "significant additional labour and energy costs to satisfy increased demand" in the period as it struggled to achieve the production rates and the output expected, it said.
"This fall in productivity has slowly begun to be reversed but a substantial and continuing improvement in productivity is essential for the company to return to profitability," said Braime.
Its distribution division, 4B, has "enjoyed a very positive start to the year", except in the UK. The US business benefited from a small increase in the value of the dollar and the corresponding fall of its imported products.
"Elsewhere, the fall of local currencies, relative to sterling, have reduced the positive effect of otherwise growing local sales revenue in the consolidated result of the group," it said.
Its component division, 4B Braime Components Ltd, was negatively impacted by the euro falling against the pound, which hit its gross margin as it makes most of its sales to customers in Europe.
"Overall the result for the first six months of 2015 was well above the same period for last year but well below budget due to the negative effect of the changes in exchange rates," it said.
"Revenues remain strong, although there has been a slowdown in the UK operating subsidiaries in July and August. The principal concerns remain the urgent need for productivity improvements in our UK manufacturing business and the current level of exchange rates and the corresponding negative effect this may have on the final result for the year," said the company in a statement.
Braime shares were untraded on Tuesday, last trading at 700.0 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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