 |
 |
||||||
[August 2009]
Cookson Group Half-Year Highlights
Cookson Group PLC has issued its half-year financial report, highlights of which are as follows:
- Revenue of £929 million, down by one-third on an underlying basis*
- Trading profit of £16.5 million. All divisions profitable
- Cost-reduction programmes proceeding as planned to reduce annual cost base by over £65 million and headcount by 3,200 (19%) from September 2008 level
- Exceptional charges (pre tax) of £86 million, including £66 million for restructuring
- Strong free cash flow of £84 million, compared to £7 million in first half 2008
- Net debt reduced by £294 million to £438 million, through rights issue and strong cash generation and after £24 million cash outflow for restructuring
- Some recent signs of recovery in ceramics end-markets; progressively improving trends in electronics end-markets since March continuing into third quarter.
(* at constant currency and metal prices and as if Foseco had been acquired on 1 January 2008)
Commenting on the group’s results and outlook, Nick Salmon, Chief Executive, said: “We have faced very tough trading conditions throughout the first half of 2009. However, through the rapid implementation of our cost-reduction programmes all divisions have remained profitable.
“After trading just above break-even levels in the first quarter, trading profit has progressively improved through the second quarter. Our main ceramics end-market of steel production has recently seen some signs of recovery and our electronic materials end-markets have seen progressively increasing levels of activity since late March.
“Combined with the rights issue, a strong focus on cash generation and lower working capital levels has enabled us to make further progress in reducing debt to £438 million, notwithstanding a cash outflow of £24 million for restructuring.
“Whilst the timing and extent of recovery in our end-markets remains very difficult to predict with accuracy, we continue to expect a progressive improvement in our performance in the second half of the year as further cost-reduction benefits materialise and sales volumes improve.”
The report showed that in Ceramics division, revenue of £543 million was 7% lower than that reported for the same period last year. On an underlying basis (at constant exchange rates and as if Foseco had been acquired on 1 January 2008), revenue was down 35%. Trading profit was £11.4 million (first half 2008: £85.1 million).
Global steel production is the division’s main end-market corresponding to a little over half of its total revenue. Over 80% of the Steel Flow Control revenue and almost all of the Linings revenue currently arises outside China, the world’s largest steel producer. According to the World Steel Association, global steel production fell 21% in the first half compared to the same period last year but, excluding China, it fell 35%. June saw a modest improvement in this trend, with a year on year decline, excluding China, of 30%, better than any month since November 2008. Weekly steel production in the US has continued to rise through July indicating that the inventory de-stocking phase is complete in NAFTA, although short-term trends in Europe are more difficult to predict due to the impact of the summer vacation season.
Underlying revenue in Steel Flow Control and Linings was down 38% and 25% respectively. Linings was less affected by the downturn in steel production as around one-quarter of its revenue is related to other industrial processes and, in its steel related activities, it benefitted from an order backlog of maintenance projects.
The foundry castings market, which represents around one-third of Ceramics division’s revenue, has similarly experienced weak trading reflecting, in particular, very low levels of light vehicle and heavy truck production, and underlying revenue was down 42%.
Fused Silica product line markets have also experienced significantly reduced demand. The solar panel industry has been experiencing a sharp de-stocking of excess inventory which was built up over the second half of last year in anticipation of strongly rising demand which has not yet materialised. Underlying revenue in the Fused Silica product line was down 27%. From a breakeven position in January and February, trading profit for the division improved as the first half progressed mainly due to the progressive realisation of savings from the cost-reduction programmes.
www.cooksongroup.co.uk
ENDS