28th Apr 2006 07:02
BBA Group PLC28 April 2006 BBA GROUP PLC Business Update Fiberweb Separation Further to its announcement on 28th February 2006, the Board of BBA todayconfirms that it is progressing plans to demerge Fiberweb, its materialstechnology business. Offers which have been received to date for Fiberweb do not, in the view of the Board of BBA, represent sufficient value for shareholders and discussions with potential acquirors have been terminated. BBA has therefore decided to demerge Fiberweb and seek a separate listing for it on the London Stock Exchange. BBA currently expects that this process will be complete during the last quarter of 2006 subject to there being no further significant changes in the trading environment, particularly associated with raw material and energy costs. Trading Update Our Aviation business, which now accounts for more than 75% of our operatingprofits, continues to perform well with performance in Maintenance, Repair andOverhaul improving. We currently anticipate that Aviation's performance for theyear as a whole will be ahead of expectations. The trading environment for Fiberweb remains challenging and for the first halfof 2006 profits will be substantially lower than in 2005, principally due tohigher energy and polypropylene costs, together with lower volumes in the NorthAmerican hygiene business. We expect that the second half will benefitsignificantly from the start up of the two lines relocated from our Torontofacility, which was closed at the end of 2005, and an improvement in efficiencyfrom productivity initiatives instigated from mid-2005. For the year as a wholewe anticipate that the performance of Fiberweb will be below the prior year. Fiberweb Restructuring The Board continues to see substantial opportunities for performanceimprovement. In order to realise the full potential of Fiberweb's North Americanhygiene business, a further restructuring of this business will be undertaken.The restructuring will involve the closure of a number of lines with anassociated reduction in workforce and builds on the process started in thesecond half of 2005 when the Toronto site was closed and its production linesrelocated to Mexico and Berlin. The cash cost of the restructuring announced today will be £4m, mostlyassociated with the severance of employees. We anticipate savings of more than£6m in a full year once the project has been fully implemented by the end of2006. In addition, there will be a non-cash asset write down of some £22massociated with the line closures. We estimate that the payback on the cashexpenditure will be less than 18 months and will lead to a substantially moreefficient, lower cost operation serving the North American hygiene market. Commenting on these announcements, Michael Harper, Chief Executive of BBA, said: "We believe that the demerger of Fiberweb is in the best interests of ourshareholders, despite the difficult trading conditions and our lowerexpectations for its contribution to the current year. Following the conclusionof discussions regarding a possible sale, we are now focused on achieving thedemerger during the last quarter of 2006. We continue to address the issues ofimproving performance and we are announcing today a further restructuring of ourNorth American hygiene business which will result in a substantially moreefficient and lower cost operation. Our Aviation businesses continue to perform well and for the year as a wholeshould be ahead of expectations." Contacts BBA Tel: +44 (0) 20 7514 3999Michael Harper, Chief ExecutiveAndrew Wood, Finance Director Brunswick Group LLP Tel: +44 (0) 20 7404 5959Mike SmithKate HolgateLucie Anne Brailsford This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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