Trading Statement

RNS Number : 7845Q

Optare PLC

17 April 2009

 



Optare plc

('Optare', 'Group' or the 'Company')

Notice of results and trading update

The Board of Optare today announces that it will announce its results for the year ended 31 December on 27th May 2009 and expects to report turnover of approximately £49.2 million. The significant deterioration in Sterling against the Euro resulted in the Company incurring higher material import costs over the period and margins in the last quarter were also adversely affected on certain major contracts, which suffered from production delays and proved more time-consuming and costly to deliver, with a corresponding impact on operating profit. The Board expects a similar impact on certain deliveries in the current year.  These issues, combined with significant levels of stock build up, resulted in a net debt position of approximately £9.4m at 31 December 2008. The stock build up is expected to unwind during the first half of this year with a corresponding reduction in net debt. 

The Group's order book currently stands at £37.4 million. Although the Board anticipates significant growth for Optare through 2009, there are increasing signs of some weakness in the bus market and our main UK bus manufacturing competitors have recently announced significant redundancy programmes. Even though there is no indication of a downturn in passenger demand for bus travel, there is an element of caution amongst some of the major operators, whilst smaller operators are finding it more difficult to finance bus purchases. In addition, it would appear that some local authorities are receiving funding more slowly than expected. As a result, the Board is lowering its expectations of demand in the second half of 2009 and we are taking the necessary steps to re-align costs accordingly. In addition, the Company has improved efficiency through improved production planning and engineering and more effective supply chain management. The Board anticipates that such actions will mitigate the impact of reduced demand during 2009 and also put the Company in a better position to maximise opportunities as the market improves.

Single site assembly

As was stated in the Company's announcement of 24 November 2009, the Company had planned to complete the relocation of its Blackburn production facility during April 2009.  The current economic environment is such that the developer of the facility has been unable to complete the required works to the building in the stipulated timeframe.  As a result, the move to Walker Park will not now go ahead and the Company will maintain production at its existing facilities. Whilst there will be an exceptional charge for abort costs, the Company will avoid the significant additional costs that would have been associated with the move. The Board continues to review strategic options for its assembly facilities and will update the market as appropriate.

Product and development

The Solo EV, an all electric, zero emissions midi-bus is currently being launched to press and customers. Initial market reaction is very positive and production will commence during the second half of 2009. There is also significant interest in the USA for this vehicle.

The group continues to invest in major new product developments. The development of the Rapta integrated double-deck bus, unveiled at the Euro Bus Expo in November 2008, is ongoing. This bus will offer, amongst its market-leading selling points, significant improvements in fuel economy due to its weight-saving integrated design.

Board appointment

The Board was delighted be able to announce recently the appointment of Jim Sumner as Chief Executive. Jim joins the company on 1 June 2009 from Leyland Trucks Limited, where he is Managing Director. Jim has an impressive track record of achieving strong revenue and profit growth and increased market share and we look forward to him utilising his skills at Optare.

For further information, please contact: 

John Fickling, Chairman, Optare plc                                                           [phone]  

Mike Dunn, CFO, Optare plc  

Louise Yates, Marketing Director, Optare plc  

Stephen Keys/Camilla Hume                                                                      [phone]  

Cenkos Securities plc  

 

END

 

 

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