Brammer warns on profits after sales slowdown
Brammer, the industrial parts group with its UK distribution base in Wolverhampton, has warned of a sharp drop in profits after a 'significant slowdown' in sales.
Since its last trading update in May, Brammer said sales were down 3% on last year.
"We saw a weak performance in the UK, which was down 6%, but also more broadly across Continental Europe," said the company in a statement.
As a result, group adjusted pre-tax profit in the first half is expected to be below expectations, at around £5 million compared to £14.1m last year. This brings it close to the terms of its banking convenant.
Brammer employs more than 3,800 people nationwide, with 1,450 in the UK at sites including Dudley, Kidderminster, Telford and Birmingham.
Weakness seen in May had not reversed, as had been expected, and has continued into June. "The UK started the month positively, but it has experienced a particularly weak performance over the last few days."
Brammer said it was now reviewing its trading outlook for the whole year, in particular in the UK where recovery plans are still at an early stage.
"We are taking measures to improve profitability and strengthen the group's balance sheet. Our stock reduction programme continues to make progress and is still expected to deliver a £30m reduction by the end of September 2016."
The company's directors are now reviewing where it is 'appropriate' to declare an interim dividend when half-year results are announced on August 4.
It comes as the company seeks to turnaround the performance of its UK business after a tough 2015. In a trading update in May the company had said the continued challenging trading in the UK and Nordics had been partially offset by growth in Continental Europe.
