Alumasc warns on FY underlying profit

15th Jul 2011 08:14

Building and engineering products company Alumasc said underlying profit for the full year is expected to be ahead of last year, but below previous management expectations after margins were squeezed at its building products division. Group revenues are expected to be in line with previous expectations however margins in the building products division for the fourth quarter were significantly lower than expected as a result of rising input costs, the group explained. Trading was also hurt by continued weakness in the UK construction market. Its construction products business experienced a 20% increase in steel costs towards the end of the financial year and profit was further diluted by lower margin export sales. Net cash flow performance to the year-end continued to be robust and remained ahead of expectations, it said. Alumasc Precision recovered strongly during the year, following strong international demand for aluminium components used mainly in off-highway diesel engines. There was also strong demand for components used in mining and construction vehicles being sold into emerging economies, it explained. "In view of the strong resurgence at Alumasc Precision over the last eighteen months and the encouraging future prospects for this business, the impairment charge booked in 2009 is to be reversed. This will give a one-off, non-cash gain of £1.2m in the financial year just ended," the company added. As a consequence, the group's statutory profit before tax is expected to exceed underlying profit, and be well ahead of the prior year statutory result. Alumasc said it would review the group dividend ahead of the announcement of its full year results in September in the light of current trading.In London shares of Alumasc fell 15.24% to 132p at 08:55am.---CJ