24th Sep 2015 07:41
LONDON (Alliance News) - RM2 International SA on Thursday said 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.
Shares in RM2 were trading down 26% at 43.00 pence Thursday morning following the announcement.
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.
Production is expected to be not less than 2.5 million pallets in 2016, it added.
"Although the decision to change to gel coating will have a significant negative impact on reported revenue and cash flow in 2015, the company believes that its long-term competitive position, brand and quality control objectives are well served by this enhancement to the BLOCKPal and ultimately are expected to drive higher market share, and greater revenues and earnings," Chief Executive John Walsh said in a statement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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