REG - Mpac Group PLC - Trading Update

MPACAnnouncement

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RNS Number : 0865P  Mpac Group PLC  01 July 2025

1 July 2025

 

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS
DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF
MAR.

 

 

Mpac Group plc

(''Mpac'' or the "Group")

 

Trading update, consolidation of US footprint, and notice of results

 

Q2 order intake impacted by tariff uncertainty causing deferral of order
decisions which will impact H2 revenue

 

Slower market conditions allow opportunity to accelerate US consolidation
plans and optimise cost base for when conditions improve

 

Mpac Group plc, a global leader in high-speed packaging and automation
solutions, issues a trading update ahead of the release of its unaudited
results for the six months ended 30 June 2025.

 

Revenue in the first half was in line with the Board's expectations, despite
the growing macro-economic headwinds resulting from US tariffs.  A strong
January order book, good performance from the businesses acquired in the prior
year, and healthy short-cycle service business all contributed to an H1
operating performance in line with management expectations.

 

However, Original Equipment ("OE") order intake in the core Mpac business
(excluding the 2024 acquisitions) has slowed materially through Q2, as
customers responded to growing uncertainty around tariffs and low consumer
confidence by deferring capital investments and cutting back on spending.
The closing order book at 30 June is expected to be circa £90.0m (Dec 2024:
£118.5m), providing materially lower than anticipated cover for H2 revenue,
with the Americas region particularly impacted.  Our services business has
remained broadly unaffected, and both of the 2024 acquisitions (BCA and CSi)
continue to trade well and in line with management expectations, with CSi
specifically benefiting from limited exposure to the US.

 

Q2 order intake is an important period for the Group as orders secured in the
period drive H2 revenue flow to where there is typically a natural full year
weighting.  Accordingly, due to the expected impact from slower orders in Q2
the Board now expects FY 2025 revenue to fall significantly below the Board's
previous expectations.

 

Given the current slower market conditions in the US, the Board has decided to
take the opportunity to   accelerate its plans to consolidate its
operational footprint in the US, optimising capacity and the cost base.  The
Group's facility in Cleveland Ohio will be closed, consolidating it with the
business acquired in 2024 in Boston Massachusetts improving utilisation rates.
The Group is also reducing capacity in Mississauga Canada.  No impact on
customers is anticipated.  The restructuring will incur non-cash impairment
charges in the region of £11.5m.

 

This and other cost saving measures have been designed to maintain existing
operating margins despite the reduction in revenue, offsetting the impact of
reduced operational leverage. This will further provide a more efficient
baseline cost for future growth when global markets improve.

 

The shortfall in customer deposits arising from reduced OE orders also has the
effect of marginally increasing June 2025 net debt compared to closing net
debt from Dec 2024. Actions to reduce debt have been taken, which include
implementing new controls to improve operational efficiency and cash milestone
delivery, re-negotiate customer and supplier terms, reduce capital expenditure
and minimise discretionary spend. The Group expects to remain comfortably
within its covenants.

 

Positively, the Group is also announcing today a 'buy in' transaction for its
UK defined benefit pensions scheme and further detail will be set out in a
separate announcement.  This will help simplify the Group's balance sheet and
eliminate a significant risk to Mpac's future profitability and cash flow.

 

The Group expects to announce its unaudited results for the six months ended
30 June 2025 on 23 September 2025.

 

Adam Holland, Chief Executive Officer, commented:

 

"During the later part of the first half of 2025 we have seen the impact of US
trade tariffs, falling consumer confidence, and growing economic
uncertainty.  Customers have increasingly chosen to defer capital investment
decisions, with the Americas region being at the epicentre with other regions
less impacted to date.  Despite resilient first half revenues, the slow down
in order intake through H1 2025 means that we must take prompt action now, in
anticipation of lower full year revenues and profit than previously expected.

 

Today we announce the restructuring of our US operations, combining two
operational sites into a single, more efficient operation in Boston
Massachusetts, and reducing capacity in Mississauga Canada.

 

The slowdown of orders and customer deposits has also impacted cash, and net
debt rose during the first half of the year.  Appropriate control measures
have has been implemented to slow and reverse this movement.

 

The actions we take today to simplify our business in response to challenging
conditions sets a direction of travel that will position the Group for future
growth when markets recover."

 

 

For further information, please contact:

 Mpac Group plc                                  Tel: +44(0)24 7642 1100

 Adam Holland, Chief Executive Officer

 Will Wilkins, Chief Financial Officer
 Shore Capital (Nominated Adviser & Broker)      Tel: +44(0)20 7408 4050

 Advisory

 Patrick Castle/Sophie Collins

 Broking

 Henry Willcocks

 Panmure Liberum (Joint Broker)                  Tel: +44 (0) 20 3100 2000

 Edward Mansfield

 Will King

 Freddie Wooding

 Hudson Sandler                                  Tel: +44 (0) 20 7796 4133

 Nick Lyon

 Nick Moore

 

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