REG - Trifast PLC - Trading Update

TrifastAnnouncement

23/04/2020 07:00

RNS Number : 5711K
  
Trifast PLC
  
23 April 2020
  
 

 
 
Trifast plc 
(Trifast, Group or TR)
 
"Holding the world together"
 
International specialist in the design, engineering, manufacture, and distribution 
of high quality industrial and Category 'C' fastenings principally to major global assembly industries
 
 
Trading Update
 
"TR is proud to be supporting essential industries around the world"
 
 
 
London, Thursday, 23 April 2020: Trifast (Main market LSE Symbol: TRI) issues the following unaudited Trading Update covering the Group's financial year ended 31 March 2020 ahead of the announcement of its preliminary financial results.
Highlights



·      Despite a challenging finish to the year:
o  Revenue levels held up well against the prior year
o  Underlying profit before tax remained broadly in line with market expectations




·       Good cash conversion, a strong balance sheet with leverage well within our banking covenants and significant facility headroom provide ongoing resilience in uncertain times




·      Global Covid-19 Task force in place and action plans progressing 




·      Project Atlas ends the year on track and on budget




·      Pipeline of opportunities and new business wins provide optimism for the longer term



 
Trading 
In our Q3 trading update we reported that ongoing weakness across several of our sectors had continued to constrain revenue growth in the second half of the year. Whilst the impact of Covid-19 at this time was restricted to the extended closure of our Chinese sites.
 
Over the course of the last six weeks of FY2020, the effect of the Covid-19 pandemic significantly widened. Leading to government mandated temporary site closures in Malaysia, Italy and Spain and customer production line shutdowns predominantly in the automotive sector. This in conjunction with a general reduction in manufacturing volumes across almost all end markets, has reduced year end trading levels across the Group. 
 
The impact of this weakness has led to a corresponding reduction in gross and operating margins against a semi-fixed cost base. However, despite these challenges underlying profit remains broadly in line with market expectations.
 
Covid-19 - Trifast's response
A cross-functional global Covid-19 Task Force has been set up to develop and implement our action plan, manage internal communications, and drive our responses and activities across the world
 
Our people
Our first priority was to ensure a safe working environment for all of our employees around the world. This included making sure we were shielding our vulnerable employees, facilitating working from home (helped by our Project Atlas investments), providing appropriate levels of PPE and enhanced cleaning, implementing staggered shift patterns, and increased spacing between workers at our sites.
 
Scenario planning, cost control and cash management initiatives
Daily stress-testing and scenario planning has been in place since the beginning of March to ensure that we are able to look ahead and make the right decisions at the right times. This will not only allow us to protect and sustain the business but will also ensure that the actions we are taking are measured and appropriate in anticipation of trading conditions improving. Our balance sheet is in a strong position, with leverage well inside our banking covenants. Significant undrawn revolving credit facilities, together with our existing cash resources, provide substantial liquidity headroom with which to navigate an extended period of uncertainty.
 
To protect our existing workforce and their ongoing employment as far as possible, we are making full use of available government backed job retention and wage subsidy schemes. From the 8 April 2020, initially up until the 30 June 2020, the Trifast plc Board has agreed to take a 20% reduction in salaries and fees. Other cost control measures include the implementation of a recruitment freeze, a pay-rise deferral, reductions in temporary and contractor headcount and a ban on all non-essential travel. 
We are working closely with all our businesses so we can continue to manage working capital effectively, whilst protecting our underlying trading relationships. Capital investment, outside of Project Atlas, is also being minimised in the short-term. 
 
In order to allow us to appropriately manage our financial position and flexibility in such an uncertain time, we do not currently intend to propose a final dividend for FY2020 at our forthcoming AGM. We plan to revisit this decision, including the possibility of a special dividend later in the year, depending on how the wider macroeconomic environment develops.
 
Operations - new opportunities in a changing marketplace
Despite ongoing lockdowns in a number of our key geographies, as of today, all of our manufacturing and distribution sites around the world are open for business. We have successfully applied for essential business lockdown exemptions in Italy, Malaysia, and Singapore, which has allowed us to continue to manufacture and service our customer base.
 
Considerable work has been undertaken with customers and the supplier base to minimise supply chain risks. We are pleased to report that we have been able to keep supply routes open for all our customers, despite the unprecedented logistical challenges around the world.
 
As a business TR is incredibly proud to be supporting several global OEMs and subcontractors in the medical sector, a market we have operated in for a significant period of time and where we continue to see ongoing opportunities for us as a business. Current good examples are our fasteners going into ventilators and medical grade masks across the world, as well as hospital beds here in the UK's Nightingale Hospitals. 
 
Outside of medical, our pipeline of opportunities and new business remains strong across our main sectors. All of which gives us good reason to be optimistic for the longer term despite the current difficult trading conditions. As a critical part of OEM supply chains, we also recognise how important it is for us to retain the capacity and capability to respond quickly as our customers and markets recover.
 
Project Atlas
As at the end of FY2020, we are pleased to report that Project Atlas remained on track and on budget. Ready to allow our first pilot in 2020 and full completion of the project by the end of FY2022. 
 
However, given the current extensive travel restrictions and the importance of providing adequate training to allow us to fully realise expected benefits, we have inevitably been forced to re-align the project timetable, deferring roll-out until the second half of FY2021. Our revised plan has been specifically designed to make best use of this deferral period, by focusing on upfront site by site preparations and additional development and training activities to increase our internal expertise and self-sufficiency.
 
As a result of the above, we are optimistic that we will be able to recover at least some of the deferral time back, although we will continue to monitor this as the ongoing impacts of Covid-19 become clearer.
 
Acquisitions
M&A continues to be a key strategic driver for growth and our activities in this area are continuing so that we remain in a position to take advantage of opportunities as conditions in our markets stabilise.
 
Looking ahead
In the short-term we will continue to closely monitor, plan, and take appropriate action to protect and sustain our business. Given the current level of uncertainty, we still consider it remains prudent to remove earnings guidance for the year ending 31 March 2021 until such a time as we have a clearer view on the impact of Covid-19. 
 
Looking ahead it is likely that there will be some long-term changes in the way that our customers, our suppliers, and the macroeconomic environment operates. We consider that the real fundamentals of our business model and strategy remain unchanged, but we are constantly reviewing what this 'new normal' will look like and how we can best address the challenges and opportunities it will bring. 
 
Summary
Despite the rapidly changing developments regarding Covid-19, our business remains solid. Our operational cash conversion remains good and we have a strong balance sheet and significant facility headroom.  This, coupled with a continued pipeline of new wins and opportunities, means the Board remains optimistic about the medium to long term future of the Group. 
 
We will provide a further update in our Full Year results announcement.
 
 
 



Enquiries please contact:




 
Trifast plc




Jonathan Shearman, Non-Executive Chairman




Mark Belton, Chief Executive Officer




Clare Foster, Chief Financial Officer




Office: 44 (0) 1825 747630




Email: corporate.enquiries@trifast.com



 



 
Peel Hunt LLP 
Stockbroker & financial adviser




Mike Bell




Tel: 44 (0)20 7418 8900



 



TooleyStreet Communications
IR & media relations




Fiona Tooley




Tel: 44 (0)7785 703523 




Email: fiona@tooleystreet.com



 
 
 



Editors' note:




 
LSE Premium Listing: Ticker: TRI




LEI number: 213800WFIVE6RUK3CR22




Group website: www.trifast.com




 
About us: 
Trifast plc (TR) is an international specialist in the design, engineering, manufacture and distribution of high quality industrial and Category 'C' fastenings principally to major global assembly industries.
 
TR employs c.1300 people across 32 business locations within the UK, Asia, Europe and the USA including eight high volume, high-quality and cost-effective manufacturing sites across the world.  TR supplies over 5,000 customers in c. 75 countries worldwide.
 
As a full-service provider to multinational OEMs and Tier 1 companies spanning several sectors, TR delivers comprehensive support to its customers across every requirement, from concept design through to technical engineering consultancy, manufacturing, supply management and global logistics.
For more information, visit 
Investor website: www.trifast.com
Commercial website: www.trfastenings.com 
LinkedIn: www.linkedin.com/company/tr-fastenings
Twitter: www.twitter.com/trfastenings
Facebook: www.facebook.com/trfastenings 



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


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