REG - Coral Products PLC - Trading Statement

Coral ProductsAnnouncement

14/10/2024 07:00

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RNS Number : 9648H  Coral Products PLC  14 October 2024

14 October 2024

Coral Products Plc

("CRU" or the "Company")

Trading Update

 

Coral Products plc, announces that the challenging trading conditions
referenced in our results announcement of 17 September 2024 are continuing
into the autumn and in particular, we have been experiencing, reduced order
levels from our core customers in both the Telecoms sector affected by the
sustained reduction in housebuilding and infrastructure projects in the UK and
the FMCG and automotive markets, which appear to have been impacted by a
general reduction in consumer spending.

The impact on revenues from the reduction in orders from these long-term
customers is expected to be partially offset by contract wins on the back of
our £3.0 million investment in new machinery albeit delivering a reduced
gross margin mix. Consequently, revenues for FY25 are expected to be in line
with the prior year.

However, with the change in revenue mix from higher to lower margin channels
and no recovery in core markets or visible improvement in consumer confidence,
the Company now anticipates a YoY margin shortfall of up to 500 basis points
and as a result Group trading for FY25 is now expected to record a loss.

While disappointing the Company has not lost customers rather the markets in
which many of its long-term customers operate have experienced significant
falls in demand over the summer months with little prospect of a full recovery
in the short term. In the medium term, we believe there is a reasonable
expectation that key underlying markets such as house building will recover
given the importance the new government has attached to it.

Elsewhere within the business, notable successes include EcoDeck in-house
manufacturing investments that fully launched in June 24 and is now operating
24-hour production, improving gross margin in this business line by a further
10%. Operational efficiencies and recently increased unit selling prices have
further strengthened operating margins. This has been achieved through our new
in-house BRC accredited food container manufacturing investments where new
contract manufacturing programmes deliver cash margin without onward risk of
sales, marketing and distribution costs.

Lance Burn, CEO, said "We began the year well, trading in line with our
targets in Q1 but since then, confidence has reduced in many of our customers'
markets. The knock-on effect has meant a reduction in orders from key
long-term customers. The new manufacturing revenues which were intended to be
incremental to our overall performance are now substituting for our core
revenues albeit at a lower margin.

However, the business fundamentally is in good shape. In the last 9 months we
have implemented significant change, re-organisnig the operational structure
to run the business under two clear divisions Rigid and Flexible plastics. We
have released capital back into the business with a sale of freehold sites
which following the re-organisation are surplus to requirements and we have
continued to invest in developing our manufacturing capabilities.

Our financial and cash position is resilient, and we will accelerate our focus
on improving the overall efficiency of the business. Demand will return to
normal levels and Coral will be ready."

 

 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 (Corporate Finance)

 Charlie Combe (ECM)

 Financial PR                        Tel: 020 3151 7008

 Novella

 Tim Robertson/Safia Colebrook

 

 

 

This announcement has been posted to: https://coralproducts.com/
(https://coralproducts.com/)

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.

 

 

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