7th Apr 2009 07:00
For immediate release 7 April 2009
Porvair plc ("Porvair" or "The Group")
AGM Statement and Interim Management Statement
Porvair, the specialist filtration and environmental technology group will today make the following interim management statement at its Annual General Meeting:
In the four months ended 31 March 2009 the Group's UK and European operations have continued to trade well. Over the same period trading in the US has deteriorated. Cash generation across the Group has been in line with expectations.
The Microfiltration division, based in the UK and Europe, is trading well with the order book supported by account wins, new project work and currency benefits. Energy filtration is having a very good year with gasification and nuclear remediation demand strong. Some Aviation schedules have weakened, notably in regional and corporate jets, but new projects have made up for any shortfall in overall demand. New products have been launched in bioscience filtration. Current trading at Seal Analytical is encouraging with acquisition integration actions almost complete.
Trading in the US has been more challenging. Sales in the Metals Filtration division fell around 15% early in the year, and a further 20% during the course of February and early March. In response employee numbers have been cut by 40% and salaries of remaining staff temporarily reduced. These actions will give rise to a one-off charge of circa £600,000. Annualised costs in Metals Filtration will be approximately £1.5m lower as a result.
To reflect current trading, the Board has amended its expectations for the year. Including one-off costs, mostly US redundancies, the Group is likely to incur a small operating loss in the first half of the year. Cash generation should remain in line with management plans. Expectations of a stronger performance in the second half are underpinned by orders in the UK due for delivery later in the year and the much lower US cost base.
The Group retains the support of its bankers, Barclays, who are reviewing the amended expectations for the year. The Board expects to be able to agree revised banking arrangements in due course.
In spite of difficult trading conditions in the US, the Board has noticed some more promising signs in recent weeks. Cash generation has been very good in the first four months of the year and raw material initiatives will drive down inventories further in the months ahead. The US sales run rate, whilst 35% down on the same period in 2008, appears to have stabilised. Much work has been done in prior years to position new products in key market segments. The Board is pleased to see this activity now accelerating and margins picking up as a result. 30% of our aluminium customers have converted to the new proprietary filter launched in 2008. This product is being offered at a price premium based on superior technical performance. The new iron foundry filter is in advanced customer qualifications and is performing well. First deliveries of our energy storage component have been made. These products, along with a significantly lower cost base in Metals Filtration, should enable a swift recovery as demand picks up.
The Group will give a further update on trading at the end of its half year in early June 2009. A full interim statement will be made on 22 June 2009.
For further information, please contact:
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Porvair plc |
01553 765 500 |
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Ben Stocks, Chief Executive |
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Chris Tyler, Group Finance Director |
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Buchanan Communications |
0207 466 5000 |
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Charles Ryland / Catherine Breen |
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