28th Jul 2009 15:23
For release at 7.00am, 29 July 2009
Interim Management Statement
Umeco plc, an international provider of advanced composite materials and supply chain services primarily to the aerospace, defence, automotive and wind energy industries, today publishes its Interim Management Statement relating to the period from 1 April 2009 to 28 July 2009, incorporating financial information relating to the period from 1 April 2009 to 30 June 2009. The Company's Annual General Meeting takes place today at 1.00pm.
Current trading
Group revenue showed 2.8 per cent growth over the same period last year (3.8 per cent reduction in constant currency terms), driven principally by growth in Supply Chain and favourable average exchange translation rates. Composites revenue in the quarter reflected the weak market conditions highlighted at the time of our preliminary results announcement in June.
Order intake levels were in line with revenue and the order book at 30 June 2009 was 221.3 million (31 March 2009: 218.9 million).
Net debt at 30 June 2009 was 130.2 million compared to 120.2 million at 31 March 2009. The increase reflects the Group's usual seasonal phasing of cash flows, with outflows seen in the first half year and greater inflows in the second half. Management actions to improve working capital ratios are on track with some benefits already coming through. We remain comfortable with the outlook for net debt and our position in respect of our banking covenants
Umeco Supply Chain
Umeco Supply Chain has continued to enjoy good demand from its OEM customer base with order intake and revenue ahead of the prior year. Increased parts responsibility and the benefits of contracts won during 2008/09 have more than offset reduced demand levels on certain programmes and some destocking by customers.
The quarter to 30 June 2009 has seen much improved trading results at Pattonair's operations in France and the US.
Umeco Supply Chain has a good pipeline of potential contracts from both current and prospective customers.
Umeco Composites
As indicated in our Preliminary Results announcement of 2 June 2009, Umeco Composites experienced difficult trading conditions in the quarter, with order intake and revenue below the prior year as a result of the weak global economic climate. In particular the regional and business jet, wind energy, motor sport and automotive markets remain depressed.
Structural materials
The Group's structural materials businesses were up against strong comparatives from the same period in the prior year when demand was exceeding our capacity. This year Advanced Composites Group (`ACG') experienced lower demand from its motor sport and automotive customers in the UK and South Africa, with sales to the Formula 1 sector adversely affected by the continuing uncertainty over racing team budgets for the 2010 season. Prompt action has been taken to reduce the cost base of both operations.
In contrast, ACG's US operations have been more resilient.
JD Lincoln saw weaker demand from the regional and business jet markets than during the same period last year and an early recovery is not anticipated.
Process materials
Aerovac and Richmond experienced a slow start to the new financial year, primarily as a result of lower demand from the wind energy market. This reflects the lack of available project financing that has been a factor since the Autumn of 2008.
Order intake from the wind energy market is however now showing some signs of recovery. In addition, resource continues to be applied to developing new revenue streams, with Richmond having recently secured a major five year contract from a new customer in the aircraft interiors sector.
IPM is trading profitably in difficult market conditions and is benefiting from the actions taken by the new management team to improve production yields, reduce raw material purchase prices and win new business.
Outlook
The global economic downturn is resulting in lower demand for our products and services compared to the first half of last year, which saw very buoyant demand, particularly in Composites. These conditions will likely result in Group operating profits for the first half of the financial year in the range 13.0 million to 14.0 million (H1 2008/09: 15.7 million).
With most of our financial year still ahead of us, there are several features to note:
* Airbus and Boeing continue to enjoy a considerable order book representing just under 7,000 aircraft. At the Paris airshow in June, both Airbus and Rolls-Royce plc, the Group's largest customer, announced more orders than expected; * Our Supply Chain order book remains healthy and offers good visibility, particularly with Rolls-Royce; * Although our order book visibility in Composites is shortening, we expect second half performance to benefit from Formula 1-related demand and some improvement in the wind energy market. While Boeing announced a further and unspecified delay to the B787 programme, the delay has not materially altered our expectations for the current financial year and has been partly mitigated by the Group securing new composite tooling orders as the Airbus 350XWB enters the prototype build stage; and * The steps taken to improve working capital ratios, together with more favourable exchange rates, should result in a significant reduction in net debt by 31 March 2010.
The Group remains vigilant to volatile market conditions and will continue to take all necessary steps to lower its cost base and further reduce its net debt whilst continuing to provide the highest level of service to all of its customers.
While the Board remains confident in the prospects for the Group, the final outcome for the year to 31 March 2010 will depend on, inter alia, the above factors and the impact on earnings of the challenging foreign exchange environment.
Chairman
As announced on 2 June 2009, Brian McGowan is to retire as Chairman by 30 September at the latest. The process to identify his successor is continuing and an announcement will be made in due course.
The Board would like to thank Brian for his considerable contribution to the development and growth of Umeco during his twelve years as Chairman.
- Ends -
For further information, please contact:-
Umeco plc Tel: +44 (0) 1926 331 800 Clive Snowdon, Chief Executive Doug Robertson, Finance Director
www.umeco.com Tulchan Communications Tel: +44 (0) 207 353 4200 John Sunnucks Mal Patel Notes
The information in this announcement is based upon unaudited management accounts.
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.
Further Information on Umeco plc
Umeco is a leading innovator in distribution and supply chain management to the aerospace & defence industries, harnessing new methods for enhancing its customers' performance and profitability. Umeco also has significant manufacturing interests in advanced composite materials for a growing range of applications in its core aerospace and defence markets and in other high performance technology industries such as motor sport, automotive and wind energy.
Listed on the London Stock Exchange, Umeco had revenue from continuing operations of 415.3 million in the year to 31 March 2009.
Umeco is managed through two business streams:-
Umeco Composites - comprises a Structural Materials business and a Process Materials business. With seven operating units located throughout the UK, Europe and the US, it provides a range of services, products, design expertise and tooling solutions principally to the aerospace market and other users of advanced composite materials.
Customers include Boeing, Airbus, BAE Systems, manufacturers of wind turbine blades, a number of manufacturers of high performance super cars and Formula 1 teams.
Umeco Supply Chain - a leading international provider of value-added distribution and supply chain outsourcing services to customers in the aerospace & defence market. With its specialisation in the supply of small and medium value components and sophisticated IT systems, its growing global customer base can enjoy significant operational, cost and working capital benefits.
Customers include Rolls-Royce plc, BAE Systems, Safran Group, Parker Aerospace, Goodrich, Thales Aerospace, Turbomeca, ATK, Lockheed Martin and the US Department of Defense.
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