2nd Aug 2011 07:00
2 August 2011 Umeco plc Interim Management Statement
Umeco plc (`Umeco' or `the Company'), the international provider of advanced composite materials, today publishes its Interim Management Statement relating to the period from 1 April 2011 to 1 August 2011, incorporating financial information relating to the Group's continuing operations for the period from 1 April 2011 to 30 June 2011. The Company's Annual General Meeting takes place today at 1.00pm.
Group Overview
This has been a transformational period for Umeco. The sale of our Supply Chain business has enabled the Company to focus its resources on its composites business, which the Board considers has attractive long term growth prospects.
Supply Chain Disposal
On 20 May 2011, we announced the proposed sale of Umeco's Supply Chain business, which trades as Pattonair. This sale was approved by shareholders at the General Meeting held on 13 June 2011 and completed on 29 July 2011. As a result of this disposal, Umeco is now entirely focused on advanced composites.
Current Trading
Umeco has made a satisfactory start to the year. Revenue from continuing operations was 12.7 per cent higher than the same period last year.
Structural Materials grew its revenues by 18.2 per cent, of which 10 percentage points is attributable to growth in our lower margin European distribution business. This business enjoyed substantial revenue growth primarily as a result of the expansion into Finland and France during the second half of last year. Profit growth is being held back compared to the same period last year due to these lower margin sales and as a result of investment in new facilities in the USA, where dual-running of facilities is being maintained during the current financial year while customer qualifications are obtained for the new premises.
Process Materials grew its revenues by 5.2 per cent. Compared to the same period last year, margins have improved reflecting the pricing actions taken over the past year.
Both our business streams have seen further increases in raw material prices during the period, however it appears that the rate of increase is now slowing. We continue to monitor input costs closely in order to protect our margins.
Aerospace & defence revenues, which accounted for 32.5 per cent of Group revenue in the period, grew by 4.4 per cent. Both Structural Materials and Process Materials benefited from a modest overall increase in revenues despite comparatively little activity on Boeing 787 related products. We are encouraged by Boeing's progress towards delivering the first 787 to its launch customer by the end of September and the prospects for production rates increasing later this year.
Our revenues in the wind energy market, which accounted for 11.8 per cent of Group revenue in the period, grew by 2.6 per cent. This modest rate of growth reflects destocking in our distribution channel ahead of the start up of our joint venture which, later this year, will begin to manufacture vacuum bagging films in China.
Revenues into the recreation and other industrial segment, which accounted for 16.9 per cent and 31.5 per cent of Group revenue in the period, grew by 21.9 per cent and 24.0 per cent respectively. The growth in our other industrial segment was largely due to the expansion of our European distribution business mentioned above.
Completion of the Supply Chain disposal has significantly reduced Umeco's investment in working capital and yielded a deleveraged financial position. As announced on 20 May 2011, a new five year revolving credit facility has been established, comprising £15.0 million and $25.0 million tranches. Our balance sheet and bank facilities provide a robust platform from which to provide focused investment in support of our growth strategy.
Outlook
We expect the revenue of the Group's continuing operations for the six months to 30 September 2011 to reflect the growth rates experienced in the first quarter. Margins, and therefore profit, in the six months to 30 September 2011 will however reflect the expansion of our lower margin distribution business and the investment being made to expand our manufacturing capacity.
Umeco continues to trade in line with the Board's expectations for the year to 31 March 2012.
- Ends -
Umeco will be holding an analyst conference call today at 8.00am (UK time) which can be accessed from within the UK and internationally by telephoning +44 (0) 20 3140 0668 and entering access code 591926#. After the conference call, replays of the call can be accessed by telephoning +44 (0) 20 3140 0698 and entering access code 378802#.
For further information please contact:
Umeco plc Tel: +44 (0) 1926 331 800
Andrew Moss, Chief Executive
Steve Bowers, Finance Director
www.umeco.com
Tulchan Communications Tel: +44 (0) 207 353 4200
Christian CowleyLucy LeghNotes:
The next scheduled update on the Group's performance will be the announcement of interim results for the six months to 30 September 2011. These will be released on 8 November 2011.
The information in this announcement is based upon unaudited management accounts. Revenue values are for continuing operations only, and exclude amounts relating to Advanced Composites Group SA (Pty) Limited (`ACG South Africa') and of Umeco's Supply Chain business trading as Pattonair. Completion of the divestment of the business and assets of ACG South Africa was announced on 8 July 2010 and the divestment of Pattonair was completed on 29 July 2011.
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 plc (`Umeco') is an international provider of advanced composite materials primarily to the aerospace & defence, wind energy, recreation and automotive industries. Revenue from continuing operations to 31 March 2011 was £207.4 million and these operations had 863 employees in manufacturing and distribution operations in the UK, Europe and the USA.
Umeco is managed through two continuing business streams:
Structural Materials - development, manufacture and supply of advanced composite materials; and
Process Materials - development, manufacture and supply of vacuum bagging materials.
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