14th Oct 2024 10:42
(Alliance News) - Coral Products PLC on Monday said the "challenging trading conditions" reported at the end of its 2024 financial year have continued due to reduced consumer spending, as shares fall more than 25%.
The Manchester, England-based company operates a group of specialist businesses involved in the design, UK manufacture and omni-channel supply of a wide range of bespoke plastic products.
Coral Products said order levels from its core customers have fallen, including in the telecoms sector, which Coral said has been affected by the "sustained reduction in housebuilding and infrastructure products in the UK", as well as the fast-moving consumer goods and automotive markets, which are suffering from "a general reduction in consumer spending".
Shares in Coral Products were down 33% at 5.52 pence each in London on Monday morning.
It expects to report a loss for financial 2025 and predicts revenue in line with the previous year, as it anticipates its recent GBP3.0 million investment into new machinery to generate contract wins to offset the reduction in orders from long-term customers.
The company swung to a pretax loss of GBP900,000 in its 2024 financial year ended April 30 from a profit of GBP1.3 million the year prior. Looking ahead, broker Cavendish predicts an adjusted pretax loss of GBP400,000 for financial 2025 and revenue of GBP31.2 million.
Coral Products emphasised that it has not lost customers, but rather that the markets in which its customers operate have suffered "significant falls in demand over the summer months, with little prospect of a full recovery in the short term".
Chief Executive Officer Lance Burn said: "We began the year well, trading in line with our targets in the first quarter, but since then, confidence has reduced in many of our customers' markets. The knock-on effect has meant a reduction in orders from key long-term customers. The new manufacturing revenues which were intended to be incremental to our overall performance are now substituting for our core revenues, albeit at a lower margin.
"However, the business fundamentally is in good shape. In the last nine months, we have implemented significant change, reorganising the operational structure to run the business under two clear divisions, Rigid and Flexible plastics. We have released capital back into the business with a sale of freehold sites which following the re-organisation are surplus to requirements and we have continued to invest in developing our manufacturing capabilities. Our financial and cash position is resilience, and we will accelerate our focus on improving the overall efficiency of the business. Demand will return to normal levels and Coral will be ready."
By Emily Parsons, Alliance News reporter
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