Disposal talks underway as Hampson profits sink
Hampson Industries has sunk into the red with an operating loss of £23.3m. The Brierley Hill-based manufacturer's year-end results this morning (30 June) revealed a drop in operating profit of 170 per cent. Pre-tax profit dropped a huge 234 per cent to a loss of £31.1m. Following the colossal fall in profit, the company said discussions regarding disposal of certain non-core assets were now "at an advanced stage".
The company, which supplies tools and components to the aerospace industry, attributed the hammering to "a number of operational challenges".
However, despite the losses, Hampson's revenue rose 17 per cent to £197.5m for the year ending 31 March 2011.
Sales increased after the company secured its largest ever tooling contract in September 2010.
However, the deal was not enough to save Hampson from sinking into the red this morning, as it also revealed a 57 per cent fall in adjusted pre-tax profit to £10.8m.
Net debt also rose 13 per cent to £92.9m.
The company attributed the colossal falls in operating and pre tax profit to "operational issues at the Michigan facilities", whereby it was charged a £34.6m impairment of goodwill.
Chairman Chris Geoghegan said: "In the face of strong macro-economic headwinds and industry pressures we have grown group revenue, although we have experienced a number of operational challenges, primarily at our Michigan facilities, that have significantly impacted our profitability.
"We are focused on increasing our operational effectiveness to improve cash generation and margins. A number of initiatives are underway and an ongoing focus on cost reduction is being implemented throughout the Group to drive a return to improved results in the year ahead."
He added that in the first two months of the year, Hampson Industries had traded in line with expectations.
The company disposed of its non-core automotive turbocharger business in June 2010, and said this morning that discussions were underway regarding the sell-off of certain other core assets.
Geoghegan said: "The board is confident that the strategic path taken by the group is laying solid foundations for growth over the medium to longer term. We also remain well positioned to exploit longer term growth trends from increasing composite usage in the industry."
