30th Sep 2015 09:44
LONDON (Alliance News) - RM2 International SA on Wednesday said its pretax loss widened in the first half due to a sharp rise in its cost of sales, as revenue more than doubled and the group backed its production guidance, while saying it will raise GBP30.0 million in a share placing.
The company, which develops and sells shipping pallets, and provides related logistical services, said its pretax loss for the half to the end of June was USD25.2 million, against USD22.1 million a year earlier, thanks to a sharp rise in its cost of sales and higher administrative costs and despite it booking IPO-related costs last year. The pallet maker floated on London's AIM market in January.
Last week, the company warned that its revenue and production numbers in the full year 2015 will be significantly below previous guidance due to a decision to change the friction coating method used for the manufacturing of shipping pallets.
The company said that, following feedback from customers on its products, it has decided to change the friction coating method on its pallets from powder coating to a gel-based system. The gel coating addresses customers' health, hygiene and safety needs better, increases durability over the life cycle of the pallet, and will bring efficiencies and cost savings to the manufacturing process, it said.
However, as a result of the change, RM2 said it will not achieve the substantial upswing in production that had been expected to begin in the third quarter, and therefore will see a fall in revenue and production numbers for the full year.
On Wednesday, it backed the guidance it gave in the revenue warning, saying production will be no less than 2.5 million pallets by 2016, with a production run-rate by the end of the fourth quarter of that year of around 300,000 pallets per month.
"As we reported last week, we are delivering a quality, mass-produced product to our customers in ever-increasing volumes which will generate powerful performance for our shareholders," said Chief Executive John Walsh.
RM2, in a separate statement on Wednesday, said it will raise GBP30.0 million via the issue of 75 million shares at 40 pence per share. The size of the issue is equivalent to around 23% of the company's existing issued share capital. RM2 shares were down 5.5% to 43.00 pence on Wednesday.
RM2 said the funding is being raised due to the delay in revenue it expects to see this year.
By Sam Unsted; [email protected]; @SamUAtAlliance
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