21st Feb 2005 09:31
21 February 2005 St Ives announces further strategic refocus and rationalisation As indicated in the announcement of the Group's preliminary results for theyear ended 30 July 2004, the UK market for more commoditised products remainsoversupplied and extremely price sensitive, particularly for longer run weboffset work. Investment in more productive equipment, which itself adds tocapacity when not accompanied by the retirement of older equipment, continuesthroughout the industry, while there is little sign of overall growth in themarket. In the light of these market conditions, the board has been keeping theGroup's cost base under constant review.In these circumstances it is proposed, subject to appropriate consultation withits workforce, to cease all production at St Ives Caerphilly Limited("Caerphilly"), whose equipment is principally suited to long-run magazine andcommercial markets. Upon implementation the closure will regrettably result insome 210 redundancies and Caerphilly's customers will be serviced from otherGroup facilities. The proposed closure forms part of the continuing strategy ofthe Group to concentrate its focus on products requiring service and quality,which are often shorter-run, with specialist finishing, fulfilment ordistribution requirements in addition to print.In the financial year ended 30 July 2004 Caerphilly made a loss before interestof almost ‚£1.8 million. The cost of closure of the factory, together with thecosts of certain other actions initiated in the last few weeks in order toreduce the Group's cost base and exposure to commodity markets further, isestimated to amount to some ‚£13 million, of which around ‚£5 million will be incash and about ‚£1 million represents the write-down of goodwill previouslycharged to reserves. These costs will be charged as exceptional in the secondhalf of the current financial year. However, the time required for consultationwith employees makes it unlikely that any benefit will be realised from theproposed closure and other actions until the new financial year.The proposed closure of Caerphilly follows similar actions undertaken in theGroup's US business, where similar conditions prevailed, in the previousfinancial year to bring capacity into line with the requirements of those partsof the market which can be served profitably. The resulting improvement inprofitability in the USA will be reflected in the Group's Results for thecurrent year.The board has reviewed the trading outlook for the Group in the light of theextremely competitive pricing and volatile demand which persist in a number ofits markets (especially those for longer-run, less time-sensitive products).The board is confident that the results for the half year ended 28 January 2005(to be announced on 12 April 2005) will be in line with market expectations.However, for the year as a whole it is unlikely that the profit beforeexceptional items and goodwill amortisation will exceed the result achieved in2004.For further information contact:St Ives plcMiles Emley, ChairmanBrian Edwards, Managing Director 020 7928 8844SmithfieldJohn Antcliffe 020 7360 4900ENDRelated Shares:
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