18th Nov 2008 07:00
INTERIM MANAGEMENT STATEMENT
18 November 2008
British Polythene Industries PLC issues today the following Interim Management Statement for the 9 months to 30 September 2008.
As we indicated at the time of our Interim Statement on 29 August, the Group is currently facing a very challenging situation, with fluctuating input costs and patchy demand from certain sectors, particularly in the UK, and now a deteriorating economic background. Despite these difficulties, the outcome for the year, before restructuring costs, is likely to be broadly in line with management expectations.
Demand from the UK construction sector and associated industries, which traditionally accounts for around 15% of Group turnover, is currently down by nearly a third. Going forward, we realise that the current drop in demand from this sector is likely to continue for some time. In contrast, other markets, particularly those related to agriculture and food retail, continue to show modest volume gains. Overall, total Group volumes for the 9 months to 30 September 2008 are in line with last year, but were over 5% behind in the third quarter compared to 2007.
Our raw material input costs entered the third quarter at record high price levels. We started to see an easing in price by the start of the fourth quarter and this now looks to be continuing into December and perhaps beyond. This drop in price would normally have resulted in a recovery in profit levels for the last quarter, but we have been hit by record high energy costs in the UK. These costs will be over £1 million higher than last year for the month of November alone and we expect the full year cost to be £8 million higher than 2007. We see these abnormal energy costs continuing into December and then starting to reduce as we enter 2009.
We have already taken some steps to reduce our cost base and announced over 50 redundancies at various plants. The associated restructuring costs are estimated at £1 million and will bring our total restructuring costs to date to £1.5 million
We have recently extended our current banking facilities and agreed new facilities to replace our private placement due for repayment in July 2009. Our total available facilities are just over £100 million with the revolving credit element of £57.5 million renewable in 2011 and asset finance of £17.5 million repayable in up to 5 years. Banking covenants under these facilities will provide flexibility on current and future restructuring costs.
We expect to announce further initiatives in the coming weeks to align our capacity with market demand.
Enquiries :
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Cameron McLatchie, Chairman
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British Polythene Industries PLC
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01475 501000
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John Langlands, Chief Executive
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British Polythene Industries PLC
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01475 501000
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Tim Spratt/Nicola Biles
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Financial Dynamics
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0207 831 3113
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