21st Oct 2008 07:00
Laird PLC
Interim Management Statement
Laird PLC is a leader in the design and supply of performance critical components and systems for wireless and other advanced electronics applications, providing innovative technology for a connected world. This Interim Management Statement covers the period from 1 July 2008 to 20 October 2008.
Laird is a resilient business and we expect our underlying performance for 2008 to be within the range of current estimates. However, although visibility of awarded customer programmes is good, visibility of actual customer off-take on those programmes is limited, as has historically been the case.
During the period we have begun to see a slowdown in the growth in customers' demand across the majority of our product lines. This is against the background of well publicised announcements by our major customers and industry wide commentary highlighting an overall softening in demand as a result of the deteriorating macro economic environment. However, year on year organic revenue growth at constant currency in the third quarter was marginally positive.
Our operating margin in the third quarter improved compared with the first half of 2008, and benefited from the effect of movements in the currencies in which we operate, including transaction effects, compared with the negative currency impact we reported in the first half of this year. We saw a further currency benefit in the third quarter on the translation of profits into sterling, due to the strengthening US dollar.
We are taking actions to reduce costs, in line with a lower growth environment. We continue to match our direct labour to changes in demand and have streamlined our organisation. We are implementing reductions in administrative and support costs, and will be accelerating projects designed to improve the efficiencies of our manufacturing operations. These measures will result in exceptional costs, currently expected to be of the order of £6 million, being incurred in 2008. We expect to see financial benefits from these measures in the fourth quarter of this year, with the full savings to be realised during 2009.
Our expenditure on engineering will be maintained, both to continue to support our customers in line with their new programmes, and on research and development to enhance and protect our technology leading positions.
Financially, Laird remains extremely strong with low financial gearing and double-digit interest cover, and with our revolving credit facility running to 2012 and our US Private Placement to 2016. These factors will enable us not only to withstand the current financial turmoil but also allow us to continue to invest selectively to enhance our technology and market positions. However, while we continue to see good levels of new business generation, organic revenue growth is unlikely to meet the medium term growth expectations we have indicated previously, while current conditions persist.
In summary, we have strong businesses, most with market and / or technology leadership positions, an extensive low cost manufacturing base, and excellent positions with global customers, many of who are themselves leaders in their markets. Many of our markets are continuing to grow, and we are well placed both to support our customers in the current environment and to benefit from any improvement in market conditions in due course.
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For enquiries: |
Laird PLC |
Maitland |
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Peter Hill, Chief Executive |
Brian Hudspith |
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Jonathan Silver, Finance Director |
Charlotte Walsh |
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Tel: 020 7468 4040 |
Tel: 020 7379 5151 |
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