News blog
Plastics Capital
- BY: Andrew Hore |
- POSTED: 27/06/2011 |
Plastic bearings and packaging manufacturer Plastics Capital says that volumes have returned to levels above the level at the beginning of 2009.
Revenues increased 26% to £33.5min the year to March 2011, while underlying pre-tax profit improved 30% to £3.9m.
Net debt has been cut from £16.1m to £11.7m at the end of March 2011. The bank facilities have been refinanced with Barclays. They include a £6m, four-year amortising term loan and an £8m, four-year revolving credit facility. This will enable increased capital investment and the company could also pay dividends. The margin over LIBOR starts at 350 basis points but it can reduce.
Sales volumes of plastic bearings grew significantly and there is scope for more customers to change to plastic bearings. The volumes for hose mandrels are one-fifth higher than the previous peak.
Following restocking, second half sales of creasing matrix products for packaging were weak. The plastic packaging business had a good year.
New machines and tooling have been acquired for the main manufacturing operations. The Thai factory is increasingly using up its capacity and more machines may be bought. This year’s capital expenditure could be £1.5m, which is more than last year and greater than depreciation.
Analysts forecast a 2011-12 profit of £4.2m.
At 95p a share, Plastics Capital is valued at £26m. The shares are almost back to their 100p flotation price. The shares are trading on less than nine times 2011-12 forecast earnings.
The share price has recovered strongly and it has trebled in the past year. The increased rating will make it easier to make acquisitions using shares. Plastics Capital always intended to be a consolidator in its sector but tough trading conditions and high debt levels mean that there has been a hiatus in the acquisition strategy. Acquisitions are back on the agenda.
Download the June 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFJune2011_21.pdf
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