10th Oct 2014 07:40
LONDON (Alliance News) - Carclo PLC Friday said it continues to believe its underlying pretax profit will be in line with its full-year expectations, but said it has commenced a full strategic review of its Conductive Inkjet Technology business, which in the first half was both underperforming and loss-making.
In a trading update, the technology-led plastics company said CIT sales of coated film in the first half "tracked expectations", but said that higher amortisation charges and a reduced level of capitalised costs in the now commercialised touch business, hit the unit's financial performance during the period.
The company's CIT business commenced volume sales of coated film to its partner Atmel Corp last year, and back in June, said that despite more challenging commercial conditions, it was well positioned to build a significant business to supply its products within a large and growing market.
"The board has initiated a full strategic review of the CIT business against a backdrop of lower-than-expected traction with end customers and continued losses. The board believes that it would be prudent to carry out an impairment review of the intangible and tangible assets of the business, and this is expected to result in a significant write down at the half year end," the company said in a statement Friday.
It said it expects the review to be completed by its financial year end.
The company's stock was down 14% at 97.53 pence in early trading Friday.
In its other units, Carclo said that first-half profits for its Technical Plastics division and its LED Technologies business both will be significantly ahead of last year.
It said its Technical Plastics unit is benefiting from its recently expanded US and Czech facilities, and said that following a further contract win for a multi-year programme for medical component manufacture for China from an existing customer, it will now move to a new, bigger facility in Taicang, which is just outside Shanghai.
"This much larger factory will replace our existing Shanghai operation and provide cleanroom manufacturing capacity to enable the group to expand its medical business in China," it said.
Carclo said its LED Technologies division has also been buoyed by new contract wins.
"Our Wipac supercar business has been awarded four new design wins so far this financial year which will support the strong growth expectations for this business which is increasing capacity at its Buckingham facility. Our LED Optics operation continues to perform well," the company said.
It said its Precision Engineering division will report profits in line with the first-half of last year, although it said recently secured new business should lead to growth into the next financial year.
"The continuing growth prospects in both Technical Plastics and LED Technologies support the board's positive outlook for the group. The financial position remains comfortable and it should be noted that any CIT write down would have no impact on the group's ability to meet its banking covenants," the company said.
Carclo said it will release its interim results for the half-year to end of September on November 18.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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