Plastics Capital plc (AIM: PLA), the niche plastics products group, announces an update on trading for the financial year to date and is pleased to confirm that the Company is trading broadly in line with market expectations.
Our operations in China are progressing well. Whilst local demand for creasing matrix has been below expectations, we are very pleased with the improvements at Shengli, our recently acquired creasing matrix manufacturer based in Beijing. Post integration, there have been notable improvements in processing speeds, quality controls, financial reporting and health and safety standards. Meanwhile, our bearings sales team has successfully converted three significant plastic ball bearing projects for different Chinese CCTV camera manufacturers amounting to approximately £0.25million in annual sales when these projects move into full production. In addition, we have started to ramp up production of machined plastic ball bearings in the new factory in Shanghai. We are also pleased to report that our recently appointed senior management team in China are already making a valuable contribution.
We continue to experience steady growth in our UK based Packaging division, with strong sales in the spring and early summer being counteracted by a relatively weak holiday period during August. Of particular note has been the successful launch of our new range of highly durable creasing matrix called Pink. We anticipate that this product range will add circa £1 million to sales over the next two to three years.
In the financial year to date, our Industrial division has experienced weaker demand than the prior year. This was partly anticipated as older projects fall away before new projects come into full production in the second half of the current financial year. In addition, we now understand that certain customers overstocked last year and this has impacted sales in the current year as compared to our expectations. In the meantime, our focus has been on new business generation where we have a significant pipeline of projects which have reached prototype testing and production trials with customers worth more than £5 million in annual sales. We expect to convert a significant proportion of these in the next six months.
Commenting, Faisal Rahmatallah, Executive Chairman, said:
“Despite slow demand and some project delays the Group continues to press ahead. We are making good progress in China and in our packaging businesses. The industrial division is experiencing some project delays and slow sales partly due to customer overstocking, but it continues to have a very strong pipeline of opportunities and previously converted business which should flow into production over the next twelve months. Altogether we anticipate another year of reasonable progress.”