Interim management statement for the period from 1 July to 11 November 2008
12/11/2008
During the period, Charter generated revenue and profit which were both well ahead of the comparable period of 2007. As in the first half of the year, the results benefitted from currency factors including the continued strength of European currencies and, more latterly, the strength of the US dollar against sterling.
Since late October, ESAB has experienced a slowdown in sales volumes in its welding segment, principally in Europe and North America. This reflects the deterioration in the macro-economic environment following the crisis in the global credit markets. By contrast, Howden continues to benefit from high levels of activity and order intake.
Accordingly, the Directors now expect the underlying performance for 2008 to be marginally below the Board’s previous expectations.
Whilst general economic and financial conditions are likely to remain uncertain for some time, the Directors feel confident that both ESAB and Howden are well placed to respond to the challenges in their respective markets.
ESAB
During the period, excluding the effect of acquisitions, the total volume of welding consumables sold increased compared to the same period of 2007. Volumes increased in all regions except North America where they declined in line with ESAB’s key competitors.
In Europe and North America, welding consumables sales volumes started to decline sharply towards the end of October, reflecting conditions in key end user industries and also de-stocking by distributors. Along with other suppliers of standard equipment, ESAB has seen weakening of demand. In response, ESAB is reducing factory output and overheads, and, if these conditions persist, ESAB will continue to take steps to manage its cost base. In the other geographies in which it operates, ESAB’s trading has generally been robust.
Order books for cutting and automation equipment remain at high levels and give visibility into 2009.
During October, ESAB signed a contract to supply welding consumables and equipment, and cutting and automation solutions, to leading wind tower manufacturer, Vestas Wind Systems in the USA. The contract, for delivery in 2009 and worth approximately $22 million, is ESAB’s largest single customer order to date and further demonstrates ESAB’s capabilities and competitive advantage in this growing market segment.
On 17 July 2008, ESAB agreed to acquire the factory, plant and certain other assets of Linkweld, located in Italy, for a consideration of €4 million. These assets provide ESAB with additional capacity for the manufacture of welding wire spools in Europe.
Howden
The high levels of activity seen in the first half of the year have continued as Howden has worked to fulfil the high levels of orders on hand from its worldwide customers in the power, oil and gas and other industries.
As at the end of October, the order book remained at similar levels to that at the half year and as such gives good sales visibility into 2009.
On 22 August 2008, Howden acquired Aeolus Industra e Comercio Ltda, a leading Brazilian designer and manufacturer of industrial fans, with a strong presence in the pulp and paper, cement and ethanol markets. The acquisition will enhance Howden’s position in Brazil and provides Howden with a manufacturing facility in the South American region. Initial consideration was 38.5 million Reais (equivalent to £12.8 million). Additional consideration, up to a maximum of 11.5 million Reais (£3.8 million), is potentially payable based on the company's 2008 profit.
Financial position
Charter’s financial position remains strong with net cash as at 31 October 2008.
During the period, Charter’s principal committed term facilities were increased from £75 million to £145 million in aggregate. These facilities are due to expire unless otherwise extended or renewed) between 2011 and 2013.
On 22 October, Charter International plc, a company registered in Jersey and with its head office in Ireland, became the new holding company of Charter plc. At that time, holders of Charter plc shares became holders of Charter International plc shares.
Capital markets event
A capital markets event is being held later today for investors and analysts. Presentation slides and recordings of the presentations will be available through the
company’s website in due course. Other than the information contained in this IMS statement, no new information on trading or outlook will be provided at this event.
Enquiries
| Andrew Fenwick; Nina Coad, Brunswick | +44 (0) 20 7404 5959 |
| Michael Foster, Chief Executive; Robert Careless, Finance Director | +44 (0) 20 7404 5959 |
Internet users will be able to view this announcement, together with other information about Charter International plc on the company’s web site www.charter.ie
Cautionary statement
Certain sections of this statement contain forward looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries in which the Company and its subsidiaries operate. It is believed that the expectations reflected in this statement are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated.