Avon Rubber PLC
22 March 2001
Avon Rubber p.l.c
Trading Update
At the Annual General Meeting on January 17th 2001 we reported
that the production of cars and other light vehicles in North
America had slowed significantly during December 2000 and early
January 2001. High stocks of unsold vehicles at our major North
American customers, Ford, General Motors and Daimler Chrysler,
have resulted in reduced vehicle builds continuing through
February and into March at a level some 15-20% lower than the
same period last year. The pattern of trading means that our
own inventory reduction programmes, like those of our
customers, will take longer than anticipated. Lower sales have
led us to reduce production and we have continued to take
actions to cut costs wherever possible, including the lay off
of employees in Mexico and the United States.
At the time of the preliminary results statement on 30th
November 2000, we announced actions to reduce annual overhead
costs for the Group by £5 million. These measures, including
the transfer of production from the former Cow Polymers U.K.
plant to France and the Czech Republic, have been implemented
and will help to mitigate the impact of cost and pricing
pressures and lower volumes. Trading conditions, however,
continue to be challenging for the remaining U.K. based
manufacturing units.
We have concluded that more radical rationalisation of our
production activities is necessary to make better use of
installed capacity globally. This will reduce the requirement
for future capital investment. We continue to focus on core
activities and will take the appropriate actions for non-core
parts of the business including the review of carrying values
to identify any necessary provisions for impairment.
Approximately half of the Group's business takes place in North
America and the impact of the slowdown has resulted in
operating profits from the region in the first 5 months of the
financial year being substantially below those of the previous
year.
At this stage it is difficult to forecast volumes for North
American Automotive for the second half. In the expectation
that car and light commercial vehicle production levels will
stabilise following a period of inventory reduction, we
currently expect that Group pre-exceptional operating profits
will improve during the second half but are unlikely to exceed
those for the equivalent period last year.
The Group will report its interim results in May when there will
be an opportunity to provide a more detailed review of the
current trading and business outlook.
Enquires to:
Avon Rubber p.l.c.
Steve Willcox, Chief Executive Tel: 01225 861120
Terry Stead, Group Finance Director
Golin/Harris Ludgate
Richard Hews Tel: 0207 324 8888
Rachel Child
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