RNS Number:7121P
Metalrax Group PLC
18 January 2007

18 January 2007

                                METALRAX GROUP PLC
                           ("Metalrax" or "the Group")

                                  TRADING UPDATE

Metalrax, the niche worldwide supplier of specialist steel products to the
automotive, engineering support services and housewares sectors, today announces
a trading update for its financial year ended 31 December 2006.

Key points:

   * Profit before tax and exceptional items for 2006 expected to be broadly
     in line with market expectations of #6.25million.
   * Materially improved second half performance compared to previous year
   * Reorganisation of Housewares underway to improve profitability from a
     smaller but more sustainable operational base
   * First phase of Group reorganisation completed - more changes planned for
     2007
   * Maintained final dividend expected

Trading update

At the time of the Group's interim results on 31 August 2006, the Board stated
that it expected an improved underlying performance in the second half of the
2006 financial year. Actual trading in the second half has confirmed this with a
performance materially ahead of the equivalent period in 2005 despite delays in
achieving the full integration of the Belsize acquisition into Bacol Fine
Blanking which will now not be completed until the end of the first quarter of
2007. The Directors believe that the Group's performance for the year ended 31
December 2006 will be broadly in line with market expectations of #6.25 million.

Housewares reorganisation

As a result of continued underperformance, the Board has put into action the
recommendations of a review it instigated of the bakeware business undertaken
jointly by management and KPMG. The recommendations include a plan to improve
profitability from a smaller but more sustainable operational base.

Actions have already commenced, the main features of which are

   * a reduction in capacity and termination of unprofitable contracts
   * downsizing to one site, allowing the other freehold site to be disposed of
   * management changes and a 30% reduction in the workforce
   * a significant reduction of other overheads

These actions are expected to result in an annualised reduction in the cost base
of around #1m. The exceptional costs associated with these actions which will be
expensed in 2007 are estimated at #0.5 million with #0.7 million of capital
expenditure also required. These amounts will be funded through the disposal of
the freehold site referred to above.

The reorganisation, once completed, will enable the Board to consider options to
maximise shareholder value from the Housewares division.

Cash Flow

Delays in the completion of some long term contracts caused by cost and time
overruns, together with anticipated property disposals being deferred into 2007,
have resulted in bank borrowings remaining at levels similar to those reported
at the time of the interim results.

Strategy update

During 2006 we completed the first phase of our strategy to reorganise the
Group's businesses. In 2007 we will continue the reorganisation process,
including further amalgamations and re-locations of our manufacturing assets
thereby improving margins and revenues, whilst releasing cash from surplus
property to reinvest in the business.

We will provide an update on any expected exceptional costs relating to these
actions together with associated capital expenditure at the time of the
announcement of the Group's preliminary results for the year ended 31 December
2006.

Dividend

The Board continues to have confidence in the longer term outlook for the Group
in light of the expected benefits of its restructuring plans together with the
cash that will be realised from property disposals as a result. As a
consequence, the Company expects to recommend a maintained final dividend.

Notice of results

The Group expects to issue its preliminary results for its financial year ended
31 December 2006 on Wednesday 21 March 2007.

Summary
The reorganisation of the Group continues towards becoming a low cost
manufacturer of specialist steel products to the automotive, engineering support
services and housewares sectors. It has a robust financial base and potential
for organic growth that can be enhanced by selective acquisitions, particularly
in the Engineering Support Services and Automotive divisions.

Overall, the Board therefore remain confident that the restructuring programme
will achieve a recovery in profit performance beginning in 2007 underpinned by
increased utilisation of our Romanian site.

For further information, please contact:

Metalrax Group PLC                              www.metalraxgroup.co.uk
Richard Arbuthnot, Chief Executive              0121 433 3444
Bill Kelly, Group Finance Director

Smithfield
Reg Hoare/Will Swan                             020 7360 4900




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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