16th Dec 2008 07:00
LAIRD PLC
PRE-CLOSE TRADING UPDATE
In accordance with our normal practice, we are issuing an update on trading in 2008, ahead of our financial year end on 31 December 2008. Laird PLC is a leader in the design and supply of performance critical components and systems for wireless and other advanced electronic applications, providing innovative technology for a connected world.
We currently expect that our underlying performance in 2008 will be within expectations. As anticipated in our Trading Update on 18 November, we have seen an acceleration of the slowdown in demand for our products across virtually all of our market sectors in November. This has continued into December, with de-stocking in the global supply chain. As a result, we expect revenue at constant exchange rates in the fourth quarter of 2008 to be 25% to 30% below that in the same period of 2007, although currency movements will mitigate considerably the reduction in revenue when expressed in Sterling.
The flexibility of our business has allowed us to respond rapidly to the slowdown. In the final quarter of the year, our direct labour will have been reduced by about 40%, or some 4,500 employees (including the normal seasonal reduction at year end), and direct and indirect overhead by approximately 14%, or some 500 employees. Our manufacturing facility in Hungary is in the process of being closed, and three of our facilities in the US will be closed or downsized significantly, with production from these sites transferred to Mexico and China. This will lead to further labour and overhead reductions during the first half of 2009. These actions will result in exceptional charges of up to £20 million being incurred in 2008, of which some £14 million will be cash and the remainder asset write-downs. Annualised net benefits will be at least £12 million, being realised progressively during 2009.
For planning purposes we are assuming that the current de-stocking lasts through at least the first quarter of 2009, and that there will be no market recovery during 2009. Our planning assumption is that global unit handset volumes will decline by 10% from 2008 levels. We expect that the cost reduction measures that we are implementing, lower commodity prices, greater penetration of our products, and the breadth of our business activities, will underpin our performance in 2009.
Financially, Laird remains strong with low financial gearing and high single digit interest cover in 2008. Our revolving credit facilities run to 2012 and our Private Placement to 2016. While the current downturn persists, we are able to maintain our investment in enhancing our technical and operational capabilities, and expect to increase our penetration at key customers as well as increase the extent of our vertical integration. These actions, together with our ability to respond rapidly to any economic recovery, will benefit the Company when markets improve.
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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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