Titon Holdings PLC Trading Update (3680T)
July 22 2022 - 2:00AM
UK Regulatory
TIDMTON
RNS Number : 3680T
Titon Holdings PLC
22 July 2022
LEI: 213800ZHXS8G27RM1D97
This announcement contains inside information
22 July 2022
Titon Holdings Plc
Trading Update
Titon Holdings Plc ("Titon", the "Group" or the "Company")
provides the following update on trading for the current year to 30
September 2022 ("FY21/22").
UK and Europe
As we indicated at the time of the Group's Interim results for
FY21/22 trading conditions in the UK and Europe in 2022 were
expected to be affected by shortages of raw materials and
components, and price increases for materials, components, labour
and energy, which would have a negative impact on our sales and
margins. Although we have seen some easing in the supply chain
constraints that held back our performance reported in the FY21/22
interim results, in the last three months we have continued to see
margin erosion from cost inflation and this has had a significant
bearing on our financial results for the second half of the year.
We will be putting through further price increases for our own
products before the year-end to seek to mitigate the margin impact
of these cost increases going forwards.
Our trading has also been affected by unforeseen operational
impacts associated with the implementation of the new internal ERP
system for the UK and European operations. This new ERP system
represents a key business improvement needed as part of our growth
strategy, but the initial implementation led to short-term
production and despatch delays which resulted in lower than
expected revenues for the last three months of trading. This has
been a source of great frustration for the Group as demand from our
customers has remained strong during this time. We have also
incurred some increased costs to implement the new ERP system and
for system development, as well as increased labour costs to ramp
up production output and to enhance staff retention as Titon has
sought to address delays to the fulfilment of customer demand. The
ERP implementation challenges are being resolved and our sales
revenues have now returned to more normal monthly levels, but in
the current financial year we do not expect sales in the final
months of the year to be sufficient to recover the sales shortfall
we have suffered. As a result of these items our results for the
FY21/22 financial year will be lower than our prior
expectations.
We are working very hard to increase the output of our
Ventilation Systems products as supply shortages ease and have seen
increased demand for sales of our Hardware products since the
changes to Building Regulations came into effect in June 2022. We
have also now filled the key management vacancies that we had
identified earlier in the year.
Rest of the World
As set out in the FY21/22 Interim results, revenues from our
subsidiary in South Korea, Titon Korea, have been disappointing
this year due to delays in site construction projects and the shift
in market demand to mechanical ventilation products from natural
ventilation. Despite these lower revenues, we expect that results
from Titon Korea and Browntech Sales Co. Ltd, our 49% owned
associate company, will show a small profit for the full year,
which is better than anticipated at the time of the Interim
results. We also expect to see revenues from sales of mechanical
products bought-in by Browntech Sales Co. Ltd, start to accrue in
FY 2022/23.
Strong balance sheet
The Group has consistently maintained a strong financial
position with an on-going focus on working capital management and
various cost efficiency initiatives. At 30 June 2022, the Group had
cash balances of approximately GBP3.0m and no indebtedness.
Keith Ritchie, Executive Chairman, commented:
"We are obviously disappointed that the Group's trading
performance for the FY21/22 full year will be lower than previously
indicated due to the margin pressures we have experienced and the
production and despatch issues we have suffered from in the last
three months as we implemented our new ERP system. We will continue
to actively manage the market-wide supply chain and inflationary
challenges and seek to increase our factory output for the
remainder of the financial year. We thank all of our customers for
their patience as we work to fulfil their orders and our employees
for their continued hard work. Despite these difficulties we remain
confident in our medium-term future, supported by our strong
financial position.
We expect to provide a further update on trading in October 2022
ahead of our full year results for FY21/22 ."
ENDS
For further information please contact:
Titon Holdings Plc
Keith Ritchie Tel: +44 (0)7748
146834
Shore Capital (Nominated Adviser and Broker) Tel: +44 (0)20 7408
Daniel Bush 4090
Tom Knibbs
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