Athlone Extrusions, the plastic sheet and film producer whose shares were listed a year ago, has issued a profit warning due to decline in its British business. Last November, it said the outlook for the British market was uncertain but demand "has declined more than we had anticipated", chairman Mr Jack Hayes told shareholders at yesterday's annual general meeting. "As a result our profits at the interim stage will be lower than last year".
Finance director Mr Enda Cunningham told The Irish Times that volume sales had fallen by 5.6 per cent since the end of October. The profit decline would be higher than that, possibly close to 10 per cent, in the first half, because the British margins were higher, he said. A recovery is expected in the second half. However, overall profits will be flat at around £4.2 million (€5.33 million) for the year to September 30th, 1999, with no growth on the previous year, he added. Next year's target of £5.4 million will also be difficult to achieve. The profits could come out at £4.8 million to £4.9 million in the year to September 30th, 2000, he said.
Mr Hayes said sales volumes to the British sanitary ware and automotive sectors, in particular, had declined since the end of the last financial year. He noted that both these sectors had been adversely affected by economic conditions. "Levels of activity in the sanitary ware market have been low, in line with the overall decline in the UK construction industry," he said. And the group's customers in the automotive sector had been adversely affected by the strength of sterling.
Despite the overall decline in volumes, Athlone Extrusions was "very encouraged by significant growth in UK sales of our specialist acrylic-capped ABS product". The group said it had maintained its market share and its margins. On a more optimistic note, Mr Hayes told shareholders that there were some signs of a pick-up in demand in Britain but it was too early to say if this was evidence of a trend. Its strategy was to reduce the group's reliance on the British market and to broaden its geographic, product and customer bases. The group has made "progress" in this pursuit.
Mr Cunningham said Britain accounted for over 80 per cent of sales in 1994. This was now below 50 per cent. Continental Europe had been very strong, he added. Mr Hayes said the company had a strong balance sheet and it would continue to seek earnings-enhancing acquisitions to broaden its base and maximise shareholder value.
