27th Sep 2005 07:00
Cosalt PLC27 September 2005 Cosalt plc("Cosalt", the "Group" or the "Company") Trading Update In the Group's interim results announcement at the end of June, the Boardhighlighted that difficulties being experienced in the caravan holiday homesmarket, predominantly as a result of industry wide over production, would impactsignificantly on the results for the current year. The Board also identified ashift in the market for new units towards the lower unit price economy sector asa result of declining consumer confidence. Since the end of June, this trend has accelerated, with greater levels ofdiscounts being offered in an increasingly price sensitive trading environment.Along with lower overhead recovery as a result of reduced production output andthe write down of residual stock, this will result in the loss from caravanholiday homes being more than previously anticipated. Whilst Custom Homes has traded in line with expectations, management hasundertaken an in-depth review of the caravan holiday home manufacturingoperation with the assistance of a leading global management consultancy firm.This has already resulted in significant cost savings and a more flexibleproduction system. Steps have been taken to further reduce stock levels and tobring the Group's product range into line with current market trends. Workingcapital requirements have been reduced. In Industrial Services, the "Back to Schools" trading period for schoolwear wasslightly disappointing, although sales will be similar to last year. At Cosalt:Ballyclare, sales across a number of sub-sectors failed to materialize as ordershave been reduced or delayed and this is likely to result in a reduction inoperating profit. The previously announced integration of the Banner schoolwear/childrenswearactivity with that of Cosalt:Ballyclare is progressing well and will becompleted on schedule. This integration will result in reduced costs andimproved efficiencies going forward. In addition, schoolwear production in theUK is being scaled down significantly to facilitate further overseasprocurement, while warehousing and logistical support functions are beingimproved and administration and IT functions co-ordinated. This will lead toadditional exceptional costs of approximately £500,000 being incurred in thecurrent financial year. These measures will reduce the cost base by more than£500,000 per annum. The Group's Marine Safety business has continued to perform in line withexpectations. It is expected that these and other previously announced management actions willresult in up to £1.9 million of exceptional charges in the current year. TheGroup's profit before tax, goodwill amortisation and exceptional items for thecurrent financial year ending 30 October 2005 will be materially lower thanpreviously expected. Although the general trading outlook remains challenging, the Board believesthat following the management actions, as outlined above, the operatingperformance of the Group should improve materially in the next financial year.In addition, management has maintained tight control of the Group's cashposition and borrowings remain in line with expectations. As a result, theBoard anticipates being able to maintain the Company's dividend. 27 September 2005 ENQUIRIES: Cosalt plc Tel: 020 7457 2020 (today)Bill Wood, Managing Director Tel: 01472 504504 (thereafter)Neil Carrick, Finance Director College Hill Tel: 020 7457 2020Mark Garraway Email: [email protected] Gregorowski Email: [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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