Trading Update '07

  • 08:00 24/08/2007
  • RNS No. 7317C

The Board today announces a trading update following completion of the first 10 months of the current financial year ended 30 September 2007.

As set out in the interim results in May 2007, the financial performance of the Company for the first 6 months was in line with management expectations. However, during the second half of the financial year it has become clear to management that the financial performance of the Company for the full year
is likely to be below market expectations.

Since the interim period, operating margins have been adversely impacted by increases in raw material prices which the Company has been unable to pass on to customers because of difficult market conditions. Production efficiency and overheads have also been affected by the introduction of new ventilation products, as a result of Building Regulation changes and then the unexpected regulatory Uturn. Additionally, the Company has experienced lower sales to Europe along with reduced profitability in the US due to the strength of Sterling.

The Directors are focused on carrying out a programme to increase market share and reduce costs significantly in 2007/2008. As part of this process the Company has closed its in-house zinc die casting plant and began outsourcing these components. In order to ensure continuity of supply during the process, inventories were increased giving rise to additional production costs throughout the summer. The cost of closing this facility during the period has been approximately £50,000, however the Directors expect to see cost reductions as a result of this action from the 2007/2008 financial year.

Taking account the above factors, the Directors believe the profit before tax for the full year will be no less than £400,000.

David Ruffell, Chief Executive of Titon, commented: “Clearly the trading performance of the Company has been disappointing in the second half of the current financial year, principally due to higher material costs and the impact of the changes in Building Regulation guidance on ventilation. However, the Board is focused on improving sales and margins, and on reducing costs within the business. The Company intends to update shareholders further in the year end statement.”