Packaging firm Robinson swings to first-half loss

Plastic and paperboard packaging manufacturer Robinson reported a decline in first-half revenue on Thursday, noting a drop of 4.3% to stand at £24.3m.

The AIM-traded firm said that despite the decreased revenue, it managed to maintain its gross margin consistent with the prior year, clocking in at 18%.

A significant decrease recorded in operating profit before exceptional items and the amortisation of intangible assets, however, with the figure plummeting to £0.5m from £1.5m in 2022.

The company reported exceptional costs of £0.5m in the period - a stark contrast to its profit of £2m a year earlier, which included a substantial profit from property sales totalling £2.1m.

In terms of overall profitability, Robinson reported a pre-tax loss of £0.9m, swinging from a profit before tax of £2.8m in the prior year period.

The board left the interim dividend unchanged at 2.5p per share.

Group net debt narrowed slightly to £9m, from £9.2m at the end of December.

That figure factored in capital expenditure of £1.1m, and proceeds from property sales worth £0.7m.

“The results for the first half of 2023 reflect the current very challenging macroeconomic conditions, which we expect to continue for the rest of 2023,” said chairman Alan Raleigh.

“Despite these conditions, we are now seeing more new business activity with existing and potential new customers, which provides opportunities for additional sales in 2023 and beyond.

“We are progressing well with the previously announced major project in Denmark, with production equipment now installed in our factory and product trials underway; this investment is expected to begin to benefit sales and profit from 2024.”

Raleigh said the demand slowdown that the firm anticipated had suppressed volumes, and resulted in lower-than-desired sales and earnings in the first half, although it expected higher sales volumes due to recent business wins and seasonality, and the benefit of the restructuring program actioned in June, to lead to an improved result in the second half of the year.

“Based on trading in the first half and our anticipated pipeline, we expect adjusted operating profit in the 2023 financial year to be marginally ahead of 2022 and in line with current expectations.

“We continue to progress our surplus property disposal agenda, which along with the buy-out of the defined benefit pension scheme and return of the escrow funds will reduce indebtedness and result in a simpler and more streamlined organisation which is able to compete and win in a volatile marketplace.

“We remain committed in the medium-term to delivering above-market profitable growth and our target of 6% to 8% adjusted operating margin.”

At 1429 BST, shares in Robinson were down 4.47% at 90.75p.

Reporting by Josh White for Sharecast.com.