17th Feb 2011 07:00
17 February 2011 Umeco plc Interim Management Statement
Umeco plc, an international provider of supply chain services and advanced composite materials primarily to the aerospace & defence industries, today publishes its Interim Management Statement relating to the period from 1 October 2010 to 16 February 2011, incorporating financial information relating to the period from 1 October 2010 to 31 January 2011.
Further to the announcement on 7 February 2011 noting the recent speculation in relation to a possible sale of its Supply Chain business, the Board can confirm that it is continuing to pursue non-exclusive discussions which may or may not lead to a sale of its Supply Chain business. Any such disposal would be subject, inter alia, to shareholder approval under the Listing Rules. A further announcement will be made in due course as appropriate.
Recent trading
Revenue in the four months to 31 January 2011 was £152.8 million, 15.3 per cent higher than that achieved in the equivalent period in the prior year.
The order book at 31 January 2011 was £260.8 million compared to £242.1 million at 30 September 2010. This reflects increased activity in all three business streams.
Markets
The civil aerospace market continues its recovery both in new build and aftermarket. However, Boeing has announced a further delay to its 787 aircraft with first deliveries now expected in the third quarter of 2011. Accordingly the Group's revenue related to this programme in the year to 31 March 2011 will be lower than previously expected, although this will be offset by higher activity levels on other aircraft programmes.
The wind energy market continues to grow, with particular strength in China while other markets are experiencing a slower recovery.
Raw material prices within Composites have continued to increase and efforts are being made to pass these through to our customers, so as to maintain margin levels.
Structural Materials
We are pleased with the progress made in developing opportunities, in particular in relation to the Airbus A350XWB and the Light Protected Patrol Vehicle ('LPPV').
The relocation of JD Lincoln is proceeding to plan. Capital expenditure on this project is expected to be US$8.0 million in the year to 31 March 2011 and approximately US$12.0 million for the project in aggregate.
The restructuring of the North American sales organisation has been completed, including termination of a sales agency agreement relating to a significant number of JD Lincoln's customers at a cost of £2.5 million. This will be treated as a significant item in the Group's results to 31 March 2011. The new organisation provides a more effective and lower cost sales structure.
GRPMS has established distribution centres in France and Finland which will be used to cross sell Composites product ranges.
Process Materials
We are encouraged by the progress that Process Materials has made since 30 September 2010.
In China, the joint venture company has been approved by the Chinese authorities and work is underway to fit out the factory premises, with the business expected to be operational by the end of 2011 as planned.
In the US, a distribution centre has been established in Seattle to service Boeing and other customers in this region.
In Europe, demand from the aerospace sector has improved in the period since 30 September 2010, with Airbus' activity levels having risen following a prolonged period of de-stocking.
Supply Chain
Market conditions currently vary by geography. While we have seen a strong increase in order intake in our UK distribution operations, as this key market recovers, continuing customer de-stocking has adversely affected our Italian business.
As expected, since 30 September 2010 aftermarket key performance indicators and margin levels have improved.
The previously announced contract with Rolls-Royce to support their North American operations went live as planned on 1 January 2011. The investment in start-up inventory for the contract is expected to be higher than originally planned, but it is expected that this additional investment will unwind during the first year of the contract term. A number of other new contracts in Europe and Asia are in the process of being implemented and we have a good pipeline of new business opportunities.
Balance sheet
Net debt at 31 January 2011 was £90.5 million (31 January 2010: £116.7 million; 30 September 2010: £64.8 million).
We expect net debt at 31 March 2011 to be higher than the level reported at 30 September 2010. This primarily reflects the Group's normal seasonality in cash flows, investment in inventory associated with new contract implementations and the capital expenditure relating to the Structural Materials business in North America.
Outlook
We are encouraged by the improving order book and the Group's trading performance for the year to 31 March 2011 remains consistent with the Board's expectations.
- Ends -
Umeco will be holding an analyst conference call today at 7.15am (UK time) which can be accessed from within the UK and internationally by telephoning +44 (0)20 3140 0668 and entering access code 878081#. After the conference call, replays of the call can be accessed by telephoning +44 (0)20 3140 0698 and entering access code 376237#.
For further information, please contact:-
Umeco plc Tel: +44 (0) 1926 331 800 Clive Snowdon, Chief Executive Doug Robertson, Finance Director www.umeco.com Tulchan Communications Tel: +44 (0) 207 353 4200 John Sunnucks Christian Cowley Notes
The next scheduled update on the Group's performance will be the announcement of preliminary results for the year to 31 March 2011. These will be released on 9 June 2011.
The information in this announcement is based upon unaudited management accounts. Revenue and order intake values are for continuing operations only, and exclude amounts relating to Advanced Composites Group SA (Pty) Limited ('ACG South Africa'). Completion of the divestment of the business and assets of ACG South Africa was announced on 8 July 2010.
Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward looking statements. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise. Nothing in this announcement should be construed as a profit forecast or estimate.
Further Information on Umeco plc
Umeco is a leading innovator in distribution and supply chain management to the aerospace & defence industries, harnessing new methods for enhancing its customers' performance and profitability. Umeco also has significant manufacturing interests in advanced composite materials for a growing range of applications in its core aerospace and defence markets and in other high performance technology industries such as motor sport, automotive and wind energy.
Listed on the London Stock Exchange, Umeco had revenue from continuing operations of £409.4 million in the year to 31 March 2010.
Umeco is managed through three business streams:-
Umeco Composites - Structural Materials
Development, manufacture and supply of advanced composite materials. Specialising in the manufacture of high performance composite materials for a diverse range of industries such as aerospace, marine, motor sport & automotive, construction, wind energy and leisure sports. Structural Materials has manufacturing operations in the UK and the US, and distributes its products worldwide. Customers include Boeing, Airbus, manufacturers of high performance super cars and Formula 1 teams.
Umeco Composites - Process Materials
Development, manufacture and supply of vacuum bagging materials to the composites industry and other markets, providing a wide range of materials and technical support to a growing number of international customers. Process Materials has manufacturing operations in Italy and France, and value-added distribution facilities in the UK and the US. It has a global distribution network. Customers include Airbus, Boeing and manufacturers of wind turbine blades.
Umeco Supply Chain
A leading international provider of value-added distribution and supply chain outsourcing services to customers in the aerospace & defence market. With its specialisation in the supply of small and medium value components and sophisticated IT systems, its growing global customer base can enjoy significant operational, cost and working capital benefits. The Supply Chain businesses trade globally as Pattonair. Customers include Rolls-Royce plc, BAE Systems, Safran Group, Parker Aerospace, Goodrich, Thales Aerospace, Turbomeca, ATK, Lockheed Martin and the US Department of Defense.
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