Trading Statement

Coral Products PLC

26 January 2024

 

26 January 2024

Coral Products Plc

("Coral" or the "Group")

Trading Update

Coral Products PLC, a specialist in the design, manufacture and supply of plastic products based in Wythenshawe, Manchester announces that following a challenging trading period during December 2023 and January 2024, the Group has seen a reduction in customer orders and accordingly, now anticipates that its revenues will be approximately 10% below the prior year (2023: £35.2 million) with EBITDA margins also negatively impacted by the deleveraging effect. Accordingly, the Group now anticipates that profitability in FY2024 and, to a lesser extent, FY2025 will be below both management and market expectations.    

Reflecting broader economic trends in the UK, Coral's customers across all channels have been closely managing working capital and inventories in the last two months, deferring purchases of replenishment inventory, and instead using up existing stock. However, Coral has maintained market share and continues to win new customers.   The Group believes that this is a short-lived situation and is expecting pipeline orders to begin to recover, starting from February 2024.

Importantly, the benefits from the Group's diversification strategy and ongoing investment in machinery, new products and channel launches over the last 12 months have not yet been fully realised. The Group expects that these sales will begin to come on stream during Q4 and will make full annualised contributions in FY25.

Under new CEO Lance Burn, who joined the Group on 2 January 2024, the Group will undertake a comprehensive review to ensure the business has a strong platform for the next stage of growth covering the following areas:

·   The Company has a secure financial position and significant freehold assets, nevertheless, in light of the current market uncertainties, and taking a prudent approach the Board has agreed to suspend the FY24 interim dividend previously announced on 11 December 2023. The intention remains to pay a dividend with the level to be determined at year-end.

·   In the last 4 weeks, the management team has identified restructuring measures and synergies with the potential to generate material savings. These efficiencies largely relate to the re-organisation of the businesses acquired over the last two years, specifically opportunities to combine workspaces and deliver central services. The review will continue to analyse all aspects to optimise the combination of all businesses and resources.

The Group will provide an update on trading following the year end of 30 April 2024.

Commenting on the announcement, Lance Burn, CEO of Coral Products, said, "I am confident that Coral is well-placed to navigate the current economic challenges whilst actively planning and supporting future growth opportunities. The fundamentals of the business are as I anticipated before I joined and the customer caution that has been a recent feature is not unique to us. Critically, our customers remain with us and we will use this moment as an opportunity to reset the business with a strong platform for long-term growth."

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information, please contact:

Coral Products plc Lance Burn, CEO	Tel: [phone]
Nominated Adviser & Broker Cavendish Capital Markets Limited Adrian Hadden/Charlie Beeson (Corporate Finance) Charlie Combe (ECM)	Tel: [phone]
Financial PR Novella Tim Robertson Safia Colebrook	Tel: [phone]

 

END