News blog

Straight

• BY: Andrew Hore |
• POSTED: 30/09/2012 |

Cost cutting and higher sales have helped recycling containers supplier Straight to improve its underlying interim profit and there are further cost cutting benefits in the second half. 

In the first half of 2012, revenues improved from £15m to £16.7m. The growth is coming from corporate, retail and export sales with municipal revenues flat. Although a loss was reported, if reorganisation costs are stripped out the profit improved from £72,000 to £161,000.

Straight has expanded its manufacturing site and also reduced its factory labour costs by one-third thanks to new shift patterns. The plant is also using recycled plastic which will further reduce costs. Straight has not paid any further instalments for the acquisition of the factory because of warranty claims.

A contract with Severn Trent will generate more than £1m of revenues over three years. Other business has been won from May Gurney and Dorset Waste Partnership.

Net debt has been reduced from £4.1m to £3.2m over the six months to June 2012. That was effectively due to a £1m reduction in inventories. The current level of inventories can be maintained but it is unlikely to go any lower. That means that Straight needs to turn more profit into cash to get those borrowings down.

At 34p a share, Straight is valued at £4.05m.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFSeptember2012_36.pdf