Interim Management Statement

RNS Number : 6689M

600 Group PLC

03 February 2009

 



3 February 2009

The 600 Group PLC

Interim Management Statement & Restructuring Update

The 600 Group PLC ("600 Group" or the "Group"), the manufacturer and distributor of precision engineering products to international markets, today announces its Interim Management Statement for the period from 28 September 2008 to 31 January 2009 (the "Period") and an update on its restructuring programme. 

As highlighted in the Chairman's statement in the interim announcement on 25 November 2008,  the Group experienced a reduction in the volume of orders for its machine tools subsequent to the half year end. This trend continued throughout the Period, impacting revenues in the UK and North American markets and the profitability in the machine tools business. For the Period as a whole Group sales, after adjustment for currency movements, reduced by 16% compared to the same period last year. Overall gross margins also deteriorated during the Period, predominantly as a result of exchange rate movements. 

As a result, the Board now expects that the Group will report an operating loss for the full year.  There will also be a number of one off costs incurred during the remainder of the year associated  with the restructuring detailed below.

David Norman, the Group's new Chief Executive, has completed a detailed review of all of the  Group's operations. A full restructuring of the business, centred on the delivery of substantial cost reductions through the development of production efficiencies and the elimination of instances of duplicated resources across the Group together with the consolidation of certain business units, is now in progress.

The key elements of the restructuring project, which has gained momentum throughout the Period, are to:

(i)                  consolidate the sales, marketing and distribution activities for UK machine tool products at the Group’s West Yorkshire operation

 

(ii)                relocate all the US operations into one new facility to combine all North American business activities at that location

 

(iii)               undertake a full review of machine tool sourcing to reduce associated risks and improve both quality and delivery

 

(iv)              close the South African machine tool operation and consolidate it into the main manufacturing facility

 

(v)                close one facility in Germany and co-ordinate all European sales and marketing initiatives from one location. 

The Board expects the restructuring exercise to deliver annualised cost savings and other benefits  in excess of £5.0 million. This will, regrettably, involve a further considerable reduction in headcount across the Group of approximately 110 people.  

The associated exceptional costs of this restructuring are expected to be approximately £1.9 million, most of which will be incurred in the current financial year. It is expected that the restructuring of the Group will be completed within the next six months and that cost-base benefits will be delivered during the year ending 27 March 2010. 

David Norman said: "I have fully reviewed the Group's operations and, whilst the fundamentals of the business are sound, considerable action is required, in current circumstances, to improve the performance of the Group and enhance shareholder value. The short-term impact of the restructuring is painful but necessary. Our actions will create a group that is well positioned to deliver growth, with improved margins, through a more robust supply chain and an effective market facing structure. The restructured organisation will be able to respond quickly to future market  opportunities both in terms of organic growth and strategic development where our criteria for value and earnings enhancement are met."

Enquiries:

The 600 Group PLC                                               Telephone: [phone]

David Norman, Group Chief Executive

Martyn Wakeman, Group Finance Director

Altium                                                                        Telephone: [phone] 

Ben Thorne

Tim Richardson

Hudson Sandler                                                      Telephone: [phone]

Nick Lyon

Wendy Baker

Notes to Editors:

The 600 Group PLC is an international group, manufacturing and marketing machine tools, machine tool accessories, lasers and other engineering products.

The Group operate from some 20 locations world-wide and sell its products around the world. Its international marketing and distribution network handles both Group products and those of other manufacturers.

Website: www.600group.com

 

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