Plastics Capital weathering tough industrial conditions

Plastics Capital said it was weathering a number of difficult market conditions on Monday, updating the market on its third quarter operations, which were broadly in line with expectations.

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The AIM-traded plastic products firm said group revenues were continuing to show a significant improvement over the first half of the current year.

It was confirmed that revenue growth trends across the company's divisions were still as reported in its interim results, with strong trading in the Films division being offset by varied conditions within the Industrial division.

Plastics Capital said product gross margins has been largely unaffected by the varied conditions, with the group's operating profit margin continuing to expand as the financial year progressed.

"Trading conditions remain somewhat variable reflecting global economic conditions, but I am pleased to say that financial performance is improving and the group is making very good progress on the key strategic initiatives that will drive its targeted growth," said executive chairman Faisal Rahmatallah.

"Overall, we anticipate that performance over the second half of the financial year will be broadly in line with market expectations".

In the Films division, the company said it had added around 1,000 tonnes of new capacity during the year, representing around 8% of annualised installed capacity.

That new capacity had now been fully utilised through new business growth in specialised sacks, for food manufacturing and distribution clients.

Plastics Capital said synergies across its two film businesses - Flexipol and Palagan - were progressing and were expected to lead to noticeably reduced costs over the next 12 months.

In Industrials, the company said it had seen a gradual improvement over the prior year, with continued conversion of won projects into sales progressing slightly slower than anticipated.

Specifically, the company said demand weakness in mandrels had been more significant than expected, but the company confirmed it was still winning new business in the area.

It said it had established sales and technical service activities for mandrels in Shanghai, and had a number of target accounts currently testing the products, fueling ongoing confidence in the division.

At 1107 GMT, shares in Plastics Capital were up 0.33% to 92p.