Sales stop falling at Scapa - Crain's Manchester Business

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Heejae Chae, Scapa's new Chief Executive

8:38 am, November 19, 2009
Sales stop falling at Scapa

Adhesive tapes manufacturer Scapa Group Plc (AIM: SCPA) today said sales had stopped falling as it reported a £3.1m pre-tax loss for the six months to September 30.

The loss, which compared with a £2.7m profit last year, masked a “significant improvement” in trading, according to the Ashton-under-Lyne based company.

It made a trading loss of £1m compared with an underlying loss of £6.4m in the second half of last year, largely due to cost cutting and better than expected sales. Turnover of £86.7m was 5.9 per cent down on the same period in 2008.

Scapa, which has appointed former Volex boss Heejae Chae as its new chief executive, said sales had stabilised at 20 per cent below pre-credit crunch levels.

The company said it had net cash of £2.9m after funding £3.5m of exceptional costs.

Scapa said overtime and express freight costs were higher than normal because of production and supply issues for automotive tapes, where there was a spike in demand from some customers. Production had to be transferred to Italy, leading to £1m of extra costs but the company said the problem had now been largely resolved.

Chairman James Wallace said: "The trading loss of £1m is a substantial £5.4m improvement on the underlying loss in the preceding six-months, aided by 6.6 per cent more sales in the current period. The improvement in trading result was split 60 per cent Europe and 40 per cent North America with Asia relatively flat. Major restructuring activities were largely concluded in the period and these will benefit the second half.

"We have now returned to underlying trading profit and cash generation. Our healthy balance sheet and cash position mean Scapa is well placed to benefit as order books recover."

Sales in Europe were £49m, a fall of 10.7 per cent with all sectors seeing a decline. In North America turnover was £32.1m, down 1.2 per cent, with sales to the construction sector down 60 per cent. In Asia sales grew 19.1 per cent to £5.6m thanks mainly to the electronics and regional infrastructure markets.

No interim dividend was declared.

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