Listed manufacturer warns that customers could be moved to alternative suppliers

11 June 2019

Listed manufacturer warns that customers could be moved to alternative suppliers

Wakefield-headquartered listed plastic components manufacturer Carclo has this morning announced a new strategy – including the possibility of customers moving to alternative suppliers  – after reporting  increased operating losses.

This morning, Carclo said its overall Group performance in the first weeks of the current financial year, and Group net debt levels, had been “broadly as anticipated.”

It added: “The Technical Plastics and Aerospace Divisions performed strongly but operating losses at Wipac, the main operating business in the Group’s LED Technologies Division, have increased, with the business continuing to incur additional costs to meet growing customer demand.

“In light of the ongoing challenges, and in order to establish a more sustainable platform for Wipac, the Board is reviewing the strategy for the business, in particular the move into the mid-volume vehicle market, which is placing significant strain on the Group. As part of this review, Wipac is working with its customers to develop a plan to refocus the operation on its historic low-volume vehicle markets where it had previously been financially successful.”

Carclo said the plan “might involve customers moving some programmes to alternative suppliers.” It said that once implemented, the revised strategy is likely to have the effect of reducing Wipac’s future sales revenue but would also, consequently, significantly reduce the Group’s cash requirements for working capital and capital expenditure.

It said that the Board expects to be able to provide more detailed guidance on the financial implications of the revised strategy at the time of the full-year results announcement.

In the meantime, and as previously announced, discussions remain on going with the bank and other stakeholders in relation to the refinancing of the Group’s borrowing facilities due to mature in March 2020. An interim Chief Restructuring Officer has been appointed to assist with the discussions.

Today’s announcement comes just two months after the firm issued a further profit warning.