Plastics Capital plc (AIM: PLA), the niche plastics products group, is pleased to provide a Q3 trading update and to confirm that the Company continues to trade broadly in line with market expectations.
Trading conditions have been stable since the Group announced its interim results and little change is expected in the near term. Demand in Europe remains depressed, but elsewhere sales are growing in-line with management expectations.
Margins and cash generated from operations remain strong and are similar to last year.
Meanwhile the group continues to secure important new business wins and to invest for future growth and, both of which will impact the next financial year. These business wins and investments include:
- A first project for a new key account, LG Corporation in South Korea, for paper pathway bearings. This has potential total sales of £0.25m per annum and will go into production later this calendar year.
- A second project in the camera lens bearing market, following on from the first announced a few months ago, which further demonstrates the value of our design solution in this potentially very significant application.
- Establishment of a manufacturing facility in Shanghai, China, where the Group will primarily make and assemble machined plastic ball bearings, for which there is significant demand in China. To date the group has been unable to tap into this due to the need for a local manufacturing presence. This is a phased investment with the initial phase representing £0.3m, and due to be ready for production in July 2013. We anticipate sales to Chinese customers will grow by over £1m over the next 3 financial years.
- A new £0.75m production line for industrial films due to go into production in May 2013. This investment will reduce production costs, enable the introduction of new products and increase the production capacity of this business area by approximately 20%.
Commenting, Faisal Rahmatallah, Executive Chairman, said:
“Many European customers, whose demand is driven by the investment cycle, continue to be affected negatively by the weak economic conditions elsewhere demand has been improving. New business activity is going well and we are investing for growth in FY13-14 and beyond. Performance should be broadly in line with expectations over the final quarter and looking into the next financial year I anticipate a year of significant progress.”