Brammer PLC Annual General Meeting Trading Update (1398Y)
May 13 2016 - 2:00AM
UK Regulatory
TIDMBRAM
RNS Number : 1398Y
Brammer PLC
13 May 2016
PRESS RELEASE
FOR RELEASE 07.00
13 May 2016
Brammer plc
("Brammer" or the "Group")
Annual General Meeting Trading Update
Brammer plc, Europe's leading distributor of quality industrial
maintenance, repair and overhaul products ("MRO"), today issues the
following Trading Update for the period from 1 January to 30 April
2016, ahead of its Annual General Meeting to be held at 12 noon
today.
Highlights
-- As expected, continued challenging trading in the UK and Nordics was partially offset by growth in Continental
Europe
-- Underlying gross margin percentage 20 bps up on last year, but offset by lower rebate accruals as a result of
stock reduction programme
-- Good progress in stock reduction programme, GBP16m reduction YTD; on track to deliver GBP30m reduction by
September 2016
-- Direct Vending sales exceeded EUR1m for the first time in April. 1,595 machines installed to end April, with a
healthy installation pipeline of 380 machines
-- Focus remains on the key operational priorities set out in the March preliminary results statement
Outlook
Against a continued expected tough trading environment and the
anticipated headwind caused by the focus on inventory reduction, we
continue to concentrate on delivering our key operational
priorities for 2016, namely reducing our debt levels, implementing
our stock reduction programme, turning around our UK business and
improving our gross margin alongside the continued application of
our growth drivers.
Whilst there will be an increased weighting of the Group's
financial results towards the second half, our expectations for the
full year, assuming our key plans for improvement in the UK and
Nordics are achieved, remain unchanged.
Trading performance
Sales per working day performance (4 months to 30 April)
SPWD at constant currency Growth year on year
--------------------------- --------------------
By geography:
--------------------------- --------------------
UK (6)%
--------------------------- --------------------
Germany 3%
--------------------------- --------------------
France 2%
--------------------------- --------------------
Nordics (19)%
--------------------------- --------------------
Other territories 2%
--------------------------- --------------------
Total (2)%
--------------------------- --------------------
By product:
--------------------------- --------------------
Bearings (4)%
--------------------------- --------------------
Other (1)%
--------------------------- --------------------
T&GM (4)%
--------------------------- --------------------
Total (2)%
--------------------------- --------------------
As indicated at the time of the Group's preliminary results in
March, trading in the early part of 2016 has been similar to Q4
2015, with a satisfactory performance in Continental Europe being
offset by continuing challenges in the UK and Nordics.
UK SPWD declined by 6% in the period, due to further volume
decreases from certain key Buck & Hickman customers and
weakness of the bearing business with Key Accounts. Excluding Buck
& Hickman, UK SPWD were in line with last year. Returning the
UK to revenue and profit growth after a period of some disruption
is a key priority. Actions to improve the UK performance and
re-invigorate the sales force are underway under the leadership of
Steve Ashmore (our new UK Managing Director), who joined on 4 April
2016. We expect to see evidence of improved performance during
2016.
Conditions in the Nordics were also challenging, with a SPWD
decline YTD of 19% reflecting poor order intake in Q4 2015.
Operations in Norway have been refocused on non-oil and gas
projects and, as a result, orders for the first four months were up
18% on the same period last year and up 75% on the last four months
of last year. Growth in Sweden is coming through from MRO and
T&GM Key Accounts.
SPWD performance outside of the UK and Nordics has been positive
with continued strength in Spain and Poland, in particular.
An increased focus on gross margin performance, one of 2016's
key operational priorities, led to a 20 basis point increase on an
underlying basis in margin in the period for the Group. However,
this was offset by the impact of lower rebates resulting from the
stock reduction programme and the decline in bearing purchases due
to difficult market conditions and volume declines from some larger
customers. SDA was up over prior year as a result of extra costs to
support the growth of our Vending programme and warehousing costs
for two new distribution centres in Continental Europe.
At the end of April we had 1,595 vending machines installed, up
from 1,305 at the end of 2015. Revenue growth from the machines
once installed continues to be in line with expectations.
Debt and stock reduction programme
The Group continues to focus on reducing debt and improving
working capital efficiency. In this regard, delivering improved
operational performance and a significant stock reduction is
key.
We have made good progress in the period on our stock reduction
programme, despite weak bearing sales. After four months we have
achieved a reduction of GBP16m and remain on track to achieve the
target reduction of GBP30m by September 2016. As previously
identified, the benefit from this stock reduction will primarily
impact net debt only in the second half of the year.
Enquiries:
Brammer plc Tel: 01565 756801
Bill Whiteley, Chairman
Ian R Fraser, Chief Executive
Duncan Magrath, Group
Finance Director
Hudson Sandler: Tel: 020 7796 4133
Andrew Hayes
Katie Matthews
Notes:
1. The results for the six months to 30 June 2016 will be announced on 4 August 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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