TIDMTRI
RNS Number : 5711K
Trifast PLC
23 April 2020
Trifast plc
(Trifast, Group or TR)
"Holding the world together"
International specialist in the design, engineering,
manufacture, and distribution
of high quality industrial and Category 'C' fastenings
principally to major global assembly industries
Trading Update
"TR is proud to be supporting essential industries around the
world"
London, Thursday, 23 April 2020 : Trifast (Main market LSE
Symbol: TRI) issues the following unaudited Trading Update covering
the Group's financial year ended 31 March 2020 ahead of the
announcement of its preliminary financial results.
Highlights
* Despite a challenging finish to the year:
o Revenue levels held up well against the prior year
o Underlying profit before tax remained broadly in line with
market expectations
* Good cash conversion, a strong balance sheet with
leverage well within our banking covenants and
significant facility headroom provide ongoing
resilience in uncertain times
* Global Covid-19 Task force in place and action plans
progressing
* Project Atlas ends the year on track and on budget
* Pipeline of opportunities and new business wins
provide optimism for the longer term
Trading
In our Q3 trading update we reported that ongoing weakness
across several of our sectors had continued to constrain revenue
growth in the second half of the year. Whilst the impact of
Covid-19 at this time was restricted to the extended closure of our
Chinese sites.
Over the course of the last six weeks of FY2020, the effect of
the Covid-19 pandemic significantly widened. Leading to government
mandated temporary site closures in Malaysia, Italy and Spain and
customer production line shutdowns predominantly in the automotive
sector. This in conjunction with a general reduction in
manufacturing volumes across almost all end markets, has reduced
year end trading levels across the Group.
The impact of this weakness has led to a corresponding reduction
in gross and operating margins against a semi-fixed cost base.
However, despite these challenges underlying profit remains broadly
in line with market expectations.
Covid-19 - Trifast's response
A cross-functional global Covid-19 Task Force has been set up to
develop and implement our action plan, manage internal
communications, and drive our responses and activities across the
world
Our people
Our first priority was to ensure a safe working environment for
all of our employees around the world. This included making sure we
were shielding our vulnerable employees, facilitating working from
home (helped by our Project Atlas investments), providing
appropriate levels of PPE and enhanced cleaning, implementing
staggered shift patterns, and increased spacing between workers at
our sites.
Scenario planning, cost control and cash management
initiatives
Daily stress-testing and scenario planning has been in place
since the beginning of March to ensure that we are able to look
ahead and make the right decisions at the right times. This will
not only allow us to protect and sustain the business but will also
ensure that the actions we are taking are measured and appropriate
in anticipation of trading conditions improving. Our balance sheet
is in a strong position, with leverage well inside our banking
covenants. Significant undrawn revolving credit facilities,
together with our existing cash resources, provide substantial
liquidity headroom with which to navigate an extended period of
uncertainty.
To protect our existing workforce and their ongoing employment
as far as possible, we are making full use of available government
backed job retention and wage subsidy schemes. From the 8 April
2020, initially up until the 30 June 2020, the Trifast plc Board
has agreed to take a 20% reduction in salaries and fees. Other cost
control measures include the implementation of a recruitment
freeze, a pay-rise deferral, reductions in temporary and contractor
headcount and a ban on all non-essential travel.
We are working closely with all our businesses so we can
continue to manage working capital effectively, whilst protecting
our underlying trading relationships. Capital investment, outside
of Project Atlas, is also being minimised in the short-term.
In order to allow us to appropriately manage our financial
position and flexibility in such an uncertain time, we do not
currently intend to propose a final dividend for FY2020 at our
forthcoming AGM. We plan to revisit this decision, including the
possibility of a special dividend later in the year, depending on
how the wider macroeconomic environment develops.
Operations - new opportunities in a changing marketplace
Despite ongoing lockdowns in a number of our key geographies, as
of today, all of our manufacturing and distribution sites around
the world are open for business. We have successfully applied for
essential business lockdown exemptions in Italy, Malaysia, and
Singapore, which has allowed us to continue to manufacture and
service our customer base.
Considerable work has been undertaken with customers and the
supplier base to minimise supply chain risks. We are pleased to
report that we have been able to keep supply routes open for all
our customers, despite the unprecedented logistical challenges
around the world.
As a business TR is incredibly proud to be supporting several
global OEMs and subcontractors in the medical sector, a market we
have operated in for a significant period of time and where we
continue to see ongoing opportunities for us as a business. Current
good examples are our fasteners going into ventilators and medical
grade masks across the world, as well as hospital beds here in the
UK's Nightingale Hospitals.
Outside of medical, our pipeline of opportunities and new
business remains strong across our main sectors. All of which gives
us good reason to be optimistic for the longer term despite the
current difficult trading conditions. As a critical part of OEM
supply chains, we also recognise how important it is for us to
retain the capacity and capability to respond quickly as our
customers and markets recover.
Project Atlas
As at the end of FY2020, we are pleased to report that Project
Atlas remained on track and on budget. Ready to allow our first
pilot in 2020 and full completion of the project by the end of
FY2022.
However, given the current extensive travel restrictions and the
importance of providing adequate training to allow us to fully
realise expected benefits, we have inevitably been forced to
re-align the project timetable, deferring roll-out until the second
half of FY2021. Our revised plan has been specifically designed to
make best use of this deferral period, by focusing on upfront site
by site preparations and additional development and training
activities to increase our internal expertise and
self-sufficiency.
As a result of the above, we are optimistic that we will be able
to recover at least some of the deferral time back, although we
will continue to monitor this as the ongoing impacts of Covid-19
become clearer.
Acquisitions
M&A continues to be a key strategic driver for growth and
our activities in this area are continuing so that we remain in a
position to take advantage of opportunities as conditions in our
markets stabilise.
Looking ahead
In the short-term we will continue to closely monitor, plan, and
take appropriate action to protect and sustain our business. Given
the current level of uncertainty, we still consider it remains
prudent to remove earnings guidance for the year ending 31 March
2021 until such a time as we have a clearer view on the impact of
Covid-19.
Looking ahead it is likely that there will be some long-term
changes in the way that our customers, our suppliers, and the
macroeconomic environment operates. We consider that the real
fundamentals of our business model and strategy remain unchanged,
but we are constantly reviewing what this 'new normal' will look
like and how we can best address the challenges and opportunities
it will bring.
Summary
Despite the rapidly changing developments regarding Covid-19,
our business remains solid. Our operational cash conversion remains
good and we have a strong balance sheet and significant facility
headroom. This, coupled with a continued pipeline of new wins and
opportunities, means the Board remains optimistic about the medium
to long term future of the Group.
We will provide a further update in our Full Year results
announcement.
Enquiries please contact:
------------------------------------------
Trifast plc
Jonathan Shearman, Non-Executive Chairman
Mark Belton, Chief Executive Officer
Clare Foster, Chief Financial Officer
Office: 44 (0) 1825 747630
Email: corporate.enquiries@trifast.com
Peel Hunt LLP
Stockbroker & financial adviser
Mike Bell
Tel: 44 (0)20 7418 8900
TooleyStreet Communications
IR & media relations
Fiona Tooley
Tel: 44 (0)7785 703523
Email: fiona@tooleystreet.com
Editors' note:
------------------------------------------------------------------------------
LSE Premium Listing: Ticker: TRI
LEI number: 213800WFIVE6RUK3CR22
Group website: www.trifast.com
About us:
Trifast plc (TR) is an international specialist in the design, engineering,
manufacture and distribution of high quality industrial and Category
'C' fastenings principally to major global assembly industries.
TR employs c.1300 people across 32 business locations within the
UK, Asia, Europe and the USA including eight high volume, high-quality
and cost-effective manufacturing sites across the world. TR supplies
over 5,000 customers in c. 75 countries worldwide.
As a full-service provider to multinational OEMs and Tier 1 companies
spanning several sectors, TR delivers comprehensive support to its
customers across every requirement, from concept design through to
technical engineering consultancy, manufacturing, supply management
and global logistics.
For more information, visit
Investor website : www.trifast.com
Commercial website: www.trfastenings.com
LinkedIn : www.linkedin.com/company/tr-fastenings
Twitter: www.twitter.com/trfastenings
Facebook : www.facebook.com/trfastenings
The information contained within this announcement
is deemed by the Company to constitute inside information
stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to
be in the public domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
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END
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