The group, which makes injection-moulded plastic and rigid paperboard packaging, announced pre-tax profit of £20,000 for the first half, compared to £940,000 for the same period last year, but this included £1,091,000 of exceptional gains. The group will pay an unchanged interim dividend of 1.5p per share.
Revenues in the group’s paperboard division improved by £1m with both North America and the UK generating new business. The plastics division saw tougher conditions with revenues declining by £2m. The fall had been expected as input costs increased. Plastic resin prices increased by 12% compared with the average 2007 price. Costs are expected to increase further in the second half of the year, but the group is recovering some of these costs from customers.
The plastics division is in the process of moving its activities to Poland and revenues from its this business doubled over the period. This contributed to an improvement in margins of 1.8%. Electricity costs, in particular, are significantly high in the UK compared to continental Europe.
The group had planned to sell its Walton Works site in Chesterfield for residential development, but plans have stalled on the back of the problems in the UK housing market. The group plans to maximise income and minimise the ongoing costs of ownership of surplus properties.
The shares were unchanged at 60p in early trading. They reached over 100p last year, but have slipped down on thin trading. While they now look relatively cheap compared to history, the group faces a lot of headwinds and its situation is unlikely to improve sufficiently to impress the stock market in the short-term.
