Coral Products warns on revenue after recent challenges

26th Jan 2024 16:28

(Sharecast News) - Shares in plastic products manufacturer Coral Products were sliding on Friday, after it described a challenging trading period during December and January in an update.

The AIM-traded firm said it now anticipated a 10% reduction in revenue compared year-on-year, primarily due to decreased customer orders and negative impacts on EBITDA margins.

It said the decline in customer orders was in line with broader economic trends in the UK, with Coral's customers actively managing working capital and existing inventories by deferring replenishment inventory purchases.

However, the company said it maintained its market share and continued to acquire new customers, anticipating a recovery in pipeline orders starting in February.

Despite the challenges, Coral said it was committed to its diversification strategy and recent investments in machinery, new products, and channel launches over the last year.

Those investments were expected to generate revenue in the fourth quarter, and contribute fully in the 2025 financial year.

Under the new leadership of chief executive Lance Burn, Coral said it was undergoing a comprehensive review to strengthen its position for future growth.

Key areas of focus included suspending the 2024 interim dividend to take a prudent approach given market uncertainties, and identifying operational efficiencies, particularly in consolidating workspaces and centralising services.

"I am confident that Coral is well-placed to navigate the current economic challenges whilst actively planning and supporting future growth opportunities," said chief executive officer Lance Burn.

"The fundamentals of the business are as I anticipated before I joined and the customer caution that has been a recent feature is not unique to us.

"Critically, our customers remain with us and we will use this moment as an opportunity to reset the business with a strong platform for long-term growth."

Coral Products said it would provide an update on trading following the end of its financial year on 30 April.

At 1600 GMT, shares in Coral Products were down 25.36% at 12.31p.

Reporting by Josh White for Sharecast.com.