API Group PLC a global supplier of foils, films and laminates. I have a holding in my growth portfolio (epic code: API).
API's interim results announced on 3 December had little seasonal cheer about them. Revenues were £56.4m down 1% on last year, although they were up 1.6% at constant currency.
The really bad news came in operating profits (excluding exceptionals) that were down 20% at £2.8m, caused by the Foils Americas division, where sales were down 24% causing a £0.4m loss compared to a profit last year of £1.1m.
Underlying EPS fell 37% to 2.4p and reported EPS also 2.4p was down 29.4%, although an interim dividend of 0.75p was declared, up 7.1% on last year.
Free cash flow showed an outflow of £(4.8m), compared to an outflow last year of £(2.9m), after payment of dividends of £1m, the net cash of £0.2m from the beginning of the year was reduced to a net debt of £5.7m.
Management state that "...The Group has experienced tough trading conditions so far in the second half, with the outlook for profits this financial year slightly down on previous expectations..."
Management state that the expected slow recovery in metallic pigment orders at Foils Americas will be partly offset by the seasonally weaker second half in the US market for graphics foils. There was little good news elsewhere - Foils Europe is experiencing sluggish markets on the continent, while Laminates have strong order levels, profits will be diluted by a weaker sales mix and Holographics is expected to drop below break-even in the third quarter.
Not comfortable reading; I continue to hold at this stage and will review my position at the full year and decide then whether to cut my losses.
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