REG - Coral Products PLC - Trading Statement

Coral ProductsAnnouncement

26/01/2024 07:00

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RNS Number : 9802A  Coral Products PLC  26 January 2024

26 January 2024

 

Coral Products Plc

("Coral" or the "Group")

 

Trading Update

Coral Products PLC, a specialist in the design, manufacture and supply of
plastic products based in Wythenshawe, Manchester announces that following a
challenging trading period during December 2023 and January 2024, the Group
has seen a reduction in customer orders and accordingly, now anticipates that
its revenues will be approximately 10% below the prior year (2023: £35.2
million) with EBITDA margins also negatively impacted by the deleveraging
effect. Accordingly, the Group now anticipates that profitability in FY2024
and, to a lesser extent, FY2025 will be below both management and market
expectations.

Reflecting broader economic trends in the UK, Coral's customers across all
channels have been closely managing working capital and inventories in the
last two months, deferring purchases of replenishment inventory, and instead
using up existing stock. However, Coral has maintained market share and
continues to win new customers.   The Group believes that this is a
short-lived situation and is expecting pipeline orders to begin to recover,
starting from February 2024.

Importantly, the benefits from the Group's diversification strategy and
ongoing investment in machinery, new products and channel launches over the
last 12 months have not yet been fully realised. The Group expects that these
sales will begin to come on stream during Q4 and will make full annualised
contributions in FY25.

Under new CEO Lance Burn, who joined the Group on 2 January 2024, the Group
will undertake a comprehensive review to ensure the business has a strong
platform for the next stage of growth covering the following areas:

·   The Company has a secure financial position and significant freehold
assets, nevertheless, in light of the current market uncertainties, and taking
a prudent approach the Board has agreed to suspend the FY24 interim dividend
previously announced on 11 December 2023. The intention remains to pay a
dividend with the level to be determined at year-end.

·   In the last 4 weeks, the management team has identified restructuring
measures and synergies with the potential to generate material savings. These
efficiencies largely relate to the re-organisation of the businesses acquired
over the last two years, specifically opportunities to combine workspaces and
deliver central services. The review will continue to analyse all aspects to
optimise the combination of all businesses and resources.

The Group will provide an update on trading following the year end of 30 April
2024.

Commenting on the announcement, Lance Burn, CEO of Coral Products, said, "I am
confident that Coral is well-placed to navigate the current economic
challenges whilst actively planning and supporting future growth
opportunities. The fundamentals of the business are as I anticipated before I
joined and the customer caution that has been a recent feature is not unique
to us. Critically, our customers remain with us and we will use this moment as
an opportunity to reset the business with a strong platform for long-term
growth."

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as amended by regulation 11 of the Market Abuse (Amendment)
(EU Exit) Regulations 2019/310. Upon the publication of this announcement via
Regulatory Information Service, this inside information is now considered to
be in the public domain.

 

For further information, please contact:

 

 Coral Products plc

 Lance Burn, CEO                                    Tel: 0161 946 9476

 Nominated Adviser & Broker

 Cavendish Capital Markets Limited                  Tel: 020 7397 1966

 Adrian Hadden/Charlie Beeson (Corporate Finance)

 Charlie Combe (ECM)

 Financial PR                                       Tel: 020 3151 7008

 Novella

 Tim Robertson

 Safia Colebrook

 

 

 

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