16th Feb 2009 07:00
16 February 2009
Umeco plc
Interim Management Statement
Umeco plc, an international provider of advanced composite materials and supply chain services primarily to the aerospace & defence industries, today publishes its Interim Management Statement relating to the period from 1 October 2008 to 15 February 2009, with the financial information relating to the period from 1 October 2008 to 31 January 2009.
Current trading
Trading in the period across both the Group's business activities has been in line with the Board's expectations. Order intake continues to be resilient to current economic conditions and the Group's order book at 31 January 2009 was £202.3 million (30 September 2008: £206.2 million). This reflects continuing demand for the Group's products and services.
Umeco Composites
Umeco Composites continues to trade well, despite the effects of the recent industrial action in Boeing's civil aerospace facilities and the further delays to the 787 programme recently announced by Boeing, and the prevailing economic climate facing its broader markets.
Within the Structural Materials businesses, Advanced Composites Group ('ACG') has further capitalised on its leading market position. Growth in demand for ACG's products reflects the increasing use of advanced composite materials in a number of markets. This was recently demonstrated by ACG's new contract to supply high performance phenolic prepreg materials for a UK Ministry of Defence vehicle armour project.
Within Process Materials, the integration of IPM, acquired in December 2008, is progressing well. Local management has been strengthened by the appointments of a general manager and financial controller. The integration process has re-inforced the Group's confidence in meeting its pre-acquisition expectations for IPM. IPM's vacuum bagging films are a key product line for our Aerovac and Richmond businesses, and the acquisition underpins our strategy for the international wind energy sector in general and the Chinese market in particular.
Umeco Supply Chain
Whilst demand from aftermarket customers has weakened, Umeco Supply Chain continues to see overall growth in activity due to strength in demand from OEM customers.
This reflects the continuing record order books for new aircraft. At the end of December 2008, Airbus and Boeing had an aggregate backlog of over 7,400 aircraft, having collectively delivered 858 aircraft in 2008. Order cancellations and deferrals have been at low levels, and have been concentrated on narrow body models on which we have relatively little involvement.
Under the terms of our major long term contract with Rolls-Royce plc, the transfer of new parts responsibility from the customer is on-going and exceptional service levels continue to be achieved.
Pattonair Fort Worth is effecting a rapid and efficient implementation of the major long term contract with ATK, announced in November. Supplies to the customer have commenced and a further opportunity with ATK is under discussion.
Pattonair France's performance has improved as a result of the review of its cost base and the renegotiation of terms with two major customers. As a consequence, we expect the business to be profitable in the fourth quarter of the current financial year.
Umeco Supply Chain continues to be successful in gaining new business and has a high level of contract opportunities in the pipeline as OEMs continue to look for ways to increase efficiencies through outsourcing. In January, it was announced that Pattonair UK had been awarded a five year supply chain contract with BAE Systems Military Air Solutions.
Net debt and banking covenants
The period from 1 October 2008 has witnessed volatility in exchange rates that has been unprecedented in recent times. Whilst the weakening of sterling against the US dollar and Euro leads to a translation benefit of revenues, profits and assets for the Group, the weakness of sterling has an adverse effect on net debt given our US dollar denominated borrowings.
Covenants in place with the Group's principal lending bank are tested semi-annually on 31 March and 30 September. The covenants require interest cover to be not less than four times profit before interest and tax, and require the ratio of net debt to earnings before interest, tax, depreciation and amortisation ('EBITDA') to be not more than 3.25 times. The calculation of the net debt to EBITDA covenant involves the translation of net debt and EBITDA at the average exchange rate for the period. Appropriate monitoring procedures are in place and, based on our current estimates, we expect to comply with the covenants at 31 March 2009 and for the foreseeable future.
Although the Group's principal banking facilities do not expire until October 2010 and August 2011, positive discussions are already underway with our lending bank regarding the refinancing of these facilities.
Outlook
Umeco has experienced another encouraging period of trading, although with the external environment expected to remain challenging for some time, we anticipate a slower rate of organic growth in the coming year and actions have been taken to reduce the Group's cost base where appropriate.
However, we believe that our chosen market segments will prove resistant to the worst effects of the downturn. The continuing record order books for new aircraft at Airbus and Boeing support the long term prospects for the civil aerospace sector, the Group's largest marketplace. Activity levels in this market across both divisions are predominantly geared towards wide bodied aircraft, deliveries of which are predicted to remain relatively stable in contrast to narrow bodied craft.
The recent acquisition of IPM further enhances the Group's range of composite material technologies and ACG continues to consolidate its leading position in the evolving composite arena across a number of markets.
Our services in supply chain management continue to be in high demand, reflecting our ability to generate significant operational, cost and working capital benefits for customers
The Group's expansion of its offering in advanced composite materials, its proven track record in successfully winning and growing supply chain contracts, and its strategy of securing key positions on new aircraft programmes, all create a strong position from which to navigate successfully through the current economic climate.
- Ends -
For further information, please contact:-
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Umeco plc |
Tel: +44 (0) 1926 331 800 |
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Clive Snowdon, Chief Executive Doug Robertson, Finance Director www.umeco.com |
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|
Hogarth Partnership |
Tel: +44 (0) 20 7357 9477 |
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John Olsen Barnaby Fry |
Notes
The next scheduled update on the Group's performance will be the announcement of results for the year to 31 March 2009. This will be released on 2 June 2009.
The information in this announcement is based upon unaudited management accounts.
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.
Further Information on Umeco plc
Umeco is a leading innovator in distribution and supply chain management to the aerospace and 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 of £335.2 million in the year to 31 March 2008.
Umeco is managed through two divisions:-
Umeco Composites - a provider of a complete range of advanced composite materials principally to the aerospace, motor sport, automotive and wind energy markets.
Customers include Boeing, Airbus, BAE Systems, manufacturers of wind turbines, a number of manufacturers of high performance super cars and Formula 1 teams including Team McLaren Mercedes
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 components and sophisticated IT systems, its growing global customer base can enjoy significant operational, cost and working capital benefits.
Customers include Rolls-Royce plc, BAE Systems, Safran Group, Parker Aerospace, Goodrich, Thales Aerospace, Turbomeca, Lockheed Martin, ATK and the US Department of Defense.
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