Q3 Trading Update

19 October 2016

Laird PLC

Q3 Trading Update

Laird PLC today announces its trading update for the third quarter from 1 July to 30 September 2016. Unless otherwise stated the trends and figures highlighted below refer to the three months ended 30 September 2016, the third quarter of the company's financial year, and the corresponding period for last year.

After a disappointing first half, a significant improvement in the second half of 2016 was expected, particularly in the Performance Materials (PM) division. However, the acceleration of production for mobile devices has come much later than in previous cycles and visibility on volumes remains poor. In addition, we have experienced increased margin pressure due to unprecedented pricing pressures and some operational factors. This has led to a very challenging trading performance in PM in Q3 and we now anticipate full year Group underlying profit before tax1 to be around £50m.

Management are taking actions to stabilise and improve the financial performance of the PM division with a considerable focus on managing costs and cash across the Group. We expect year end net debt to EBITDA to be within covenant limits of 3.5x.

Group Performance

Revenue in sterling for the third quarter increased by 29% to £207m (Q3 2015: £160m). On an organic2 basis at constant currency, revenue was lower by 4%.

Year to date, for the nine month period to 30 September, revenue increased 20% to £560m (YTD Sept 2015: £466m). On an organic2 basis at constant currency, revenue was down 4%.

Divisional Performance

Wireless Systems

Wireless Systems (WS) revenue in the third quarter increased 58% to £93m (Q3 2015: £59m). On an organic2 basis at constant currency, revenue was lower by 3%.

Revenue growth in this division has been adversely impacted in Q3 by the challenges faced in the Wireless Automation and Controls business (WACS). The rest of WS continues to perform well with revenue up 4% on an organic constant currency basis2. Further design wins particularly in the automotive sector are supporting future growth and trading in Novero remains consistent with that outlined at the interim results.

Performance Materials

Performance Materials revenue in the third quarter increased 12% to £113m (Q3 2015: £101m). On an organic2 basis at constant currency, revenue was down 5%.

Trading conditions for PM have continued to be very challenging in Q3 due to the much slower production ramp, pricing and margin pressures and the overall lack of visibility in the Mobile Devices market. Actions are being taken to address the operational performance of this business through a range of self-help initiatives.

Commenting on today's announcement Tony Quinlan, Chief Executive, said:

 "We are very disappointed by these adverse developments in the mobile devices market for our Performance Materials division, at a time when other parts of the business continue to perform well. We are confident that the actions we have taken will stabilise and improve the business.

Moving into 2017, the work to improve our operating model is progressing well and we are on track to deliver the associated significant financial benefits. This, together with the Novero turnaround, as well as the positive momentum in our automotive business, will improve performance next year and beyond."

A conference call will be hosted by Tony Quinlan at 08.30 BST today to discuss this announcement in more detail:

Confirmation code: 8685023

1Underlying profit before tax is stated before exceptional items, amortisation of acquired intangible assets, deferred tax on acquired intangible assets, goodwill and US capitalised development costs, gain or loss on disposal of businesses and impact arising from the fair valuing of financial instruments

2Organic constant currency growth is calculated by eliminating the revenue from acquisitions made for a period of twelve months from the acquisition date and applying prior year exchange rates to convert current year revenues to GBP.

This announcement contains inside information 

About Laird PLC:

Laird is a global technology company providing systems, components and solutions that protect electronics from electromagnetic interference and heat, and that enable connectivity in mission-critical wireless applications and antennae systems. Laird is a global leader in the field of innovative radio frequency ("RF") engineering.

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