Trading Update - for the year to 31 December 2019

RNS Number : 6687Z

Flowtech Fluidpower PLC

14 January 2020

 

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

Tuesday, 14 January 2020

FLOWTECH FLUIDPOWER PLC ("Flowtech" or the "Company") Trading Update

Flowtech Fluidpower plc, the UK's leading specialist supplier of technical fluid power products, provides an update on trading for the financial year to 31 December 2019.

Market conditions in the second half of 2019, in particular the final quarter, have been challenging; data from the British Fluid Power Association shows a decline in distribution channel revenues of 7% and 13% for October and November respectively, and a decline in revenue of in excess of 10% in October for the manufacturers within the sector.

Against this backdrop, the Group experienced organic revenue decline of c.10% in Q4; as a result Group revenue is expected to be c.£112.4m which represents overall organic revenue reduction of c.1.5% (H1 growth of c.3% and H2 decline of c.6%) for FY19.  The Board now expects to report underlying profit before tax* of not less than £9.0 million.

Expectations for FY20 have been reviewed by the Board and whilst it is confident that investments made in 2019 will lead to market outperformance, current conditions are such that achieving organic growth may prove difficult, in particular in the first half of FY20.  It is therefore possible that the positive impact of the cost saving initiatives which have now been formulated, and which will shortly be implemented, will be offset, at least in part, by market conditions remaining challenging.

Despite current trading, the Board is encouraged to report that significant and sustainable reductions in working capital throughout 2019 of c.£5m have been achieved.  Net debt** of £16.6m as at 31 December 2019 is in line with market expectations. Q4 has seen debt reduction of £2.5m in a period which paid out a £1.3m interim dividend.  A combination of strong operational cash flow, no further payments of deferred consideration in respect of historic acquisition activity and the continued focus on working capital, leads to confidence that FY20 will generate significant positive cash flow.

Notwithstanding the current difficult market conditions, the Board remains confident in delivering sustained operational improvements and significant procurement benefits.

Flowtech Fluidpower plc will issue a further detailed trading update during the week commencing 10 February 2020.  This will include further details on shorter term trading conditions as well as additional commentary on the significant savings which will result from the implementation of the operational cost reduction plan in Q1 2020 and the benefits of improvements in procurement activity.

Notes:

* Excludes acquisition costs, restructuring costs, share-based payment costs and amortisation of acquired intangibles.

** Net debt excludes IFRS16 lease debt.

The numbers in this update remain subject to final close procedures and the full year audit.

Enquiries to: Flowtech Fluidpower plc Bryce Brooks, Chief Executive Officer Russell Cash, Chief Financial Officer Tel: [phone] Email [e-mail]  Website: www.flowtechfluidpower.com

LSE: AIM symbol FLO

Zeus Capital Limited (Nominated Adviser and Broker) Andrew Jones, Kieran Russell (corporate finance) Dominic King, John Goold (sales & broking) Tel: [phone]

finnCap Limited (Joint Broker) Ed Frisby, Kate Bannatyne (Corporate Finance) Rhys Williams, Andrew Burdis (Sales & Broking) Tel: + 44 (0) 20 7220 0500

TooleyStreet Communications Fiona Tooley Tel: [phone] email [e-mail]

 

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