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 Films division, which incorporates the Flexipol business acquired in November 2014, is trading strongly as we move into Q3 of the current financial year, which is generally a busy time of year. Margins in this division are improving from a temporary squeeze in Q1 as raw material prices increased faster than selling prices. Sales prices have now caught up and input prices have started to weaken, which bodes well for the second half. 850 tonnes of new extrusion capacity has been installed this month at Flexipol, so expanding our capacity by circa 10%. In addition, a project at Flexipol to add 600 tonnes of specialist conversion capacity for a new product range is on track for installation by the end of the current financial year.
Our Industrial division is seeing improved trading. New business is flowing through in both bearings and mandrels to compensate for relatively weak global demand conditions. In bearings, we anticipate a seasonal upswing in H2 associated with the swimming pool cleaner market, for which sales are loaded towards the winter months. Project conversions are progressing satisfactorily and we are hopeful that we will be able to announce a substantial new contract win during H2 for a project where we have prototypes under test and currently performing well. In mandrels, new customer conversions, some in Europe and some in the USA, have been excellent and have compensated for weak market demand. We are hopeful that this will continue and that demand will start to improve towards the end of H2.
Creasing matrix sales have been slower than the prior year. This business area is significantly exposed to emerging market demand, which is being negatively affected by prevailing global conditions. Of note in this business is that we have recently been successful in recruiting the UK Sales Director of our principal competitor. We believe that there is excellent scope for improving our position in our home market.
In China, we have been making good progress, with sales stable in matrix and growing in bearings and mandrels. It is still early days for us in China but we remain confident that the opportunities for long term growth are strong.
Commenting, Faisal Rahmatallah, Chairman, said:
“Our largest division, Films, is trading well and moving into its busy period and we are adding capacity to progress further in this area. Our Industrial division continues to improve too, being led by new business wins in difficult market conditions. Margins are improving and costs are under control. We anticipate another year of progress.”