RNS Number : 1073C
Titan Europe PLC
06 November 2009
Date: 6 November 2009
Immediate Release
Titan Europe Plc
("the Group" or "Titan Europe")
Trading Update
Titan Europe provides the following trading update:
Trading
As predicted in the Group's interim report published in August 2009, revenue for Q3 2009 remained weak having continued to be impacted by both the underlying weakness in our customers end markets and by extended holidays and shutdowns across our European customer base.
Whilst in August it was also expected that the last quarter of the current financial year ending December 2009 would be stronger, it has now become clear that this anticipated upturn which had been built into schedules by some of the Group's customers, was premature and on this basis, we believe that Q4 2009 will continue to reflect weak demand. However, we believe that Q3 2009 represented the bottom of our market.
This being said, it is now widely understood within the industries which we supply that 2009 end user sales have been significantly higher than equipment manufacturers' build rates and that without any end-market increase, volumes of manufacture for our market segments must rise next year. Currently, Titan Europe's Q1 2010 customer schedules reflect this.
As reported on 14 August 2009, Titan Europe's revenue for the six months ended 30 June 2009 was £149.2 million with a trading loss of £3.9 million. At that time, the Directors of Titan Europe expected the Q4 2009 upturn to leave the Group's full year revenue roughly double those of the first half numbers reported. However, as already stated the Q3 2009 sales level was very weak and at this stage we now forecast that Q4 2009 will be only slightly better.
Our programme of reducing fixed costs, both in terms of physical assets and also, unavoidably, personnel has continued. As part of this programme, there have been substantial changes in manufacturing methods which has resulted in greater flexibility, faster changeover times and lower inventory costs.
The main impact of the recession in our industry sectors namely; agriculture, construction and mining equipment is being felt in Europe and North America, but our Australian and South American businesses are fairing relatively well. Equally, the main areas for restructuring of manufacturing resource have been in the 'traditional' manufacturing base of Western Europe, particularly Italy. We expect to continue the programme of locating production into new growth areas and as a result, this will have a permanent impact on some of our more traditional manufacturing supply routes.
We are continuing our Chinese development for undercarriage manufacture which we see as a major growth area and a key driver for future profits. Our initial focus is on servicing the Chinese manufacturing plants of our existing 'Western' customers.
Our Indian associate Wheels India has seen a significant improvement in performance.
Outlook
The Group is maintaining its net debt targets and continues to see encouraging signs that its strategy of strengthening customer relations with strong technical support is attracting additional business, albeit at much lower overall levels.
In the short-term, the Board expects to see agriculture and mining investment reviving faster than the construction industry and consequently as a business, the Group is tailoring its product offering to suit this expectation.
Enquiries:
Mike Akers, Chief Executive
Gary Chesterton, Group Finance Mark Percy Fiona Tooley or Keith Gabriel
Director
Titan Europe Plc Seymour Pierce Citigate Dewe Rogerson Ltd
Today: +44 (0) 1562 850561 Tel:+44 (0) 20 7107 8000 Tel:+44(0) 121 362 4035
www.titaneurope.com Mobile: +44 (0) 7785 703523 (FMT)
Ticker AIM: TSW +44 (0) 7770 788624 (KG)
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