API pre-close trading update

API Group PLC a global supplier of foils, films and laminates.  I have a holding in my growth portfolio (epic code: API).

API Group issued a pre-close trading update today, stating that they experienced a strong overall trading performance in the second half. 

 

The recovery in the second half, after the weak first half, was insufficient though to fully compensate, so that the full year results are now anticipated to be at the lower end of expectations.  This will therefore likely produce EPS of 8.9p and places a P/E rating of just 7.5 on the shares.

 

By product group they stated that:

 

Holographics returned to break even in the last quarter.

 

Laminates results improved after a full six months contribution from the major new supply contract.

 

Foils Europe continued to make solid progress after the first half re-organisation of its UK operations. 

 

Foils Americas' volume weakened unexpectedly in the final three months.  

 

Management also said that further progress has been made on debt reduction and they expect to report a positive cash position at the year end, for the first time in 15 years.  This compares to a net debt position of £5.2m at the interim stage.

The announcement caused a 7.5% decline in the share price to 67p, which offers a reasonably priced buying opportunity for a business that has further opportunity for growth (see here for my initial write-up on 16 February).