Coral Products swings to losses as Covid hits business hard

Injection-moulded plastics manufacturer Coral Products reported revenue of £22.32m in its final results on Tuesday, falling from £24.73m in the prior year.

The AIM-traded firm said its underlying operating profit fell to £0.4m for the 12 months ended 30 April, from £1.02m in the prior year.

It did record a goodwill impairment of £0.35m in the 2020 financial year, having reported no such impairment in 2019.

The company swung to an operating loss of £0.38m from a profit of £0.48m a year earlier, as its gross margin remained broadly stable at 35.8%, compared to 35.9% in the 2019 financial year.

Underlying losses per share were 0.05p, compared to earnings of 0.75p, while the company paid nil dividend for the year, having distributed 0.25p per share a year ago.

The board said the fall in group revenues was “entirely” due to Covid-19, as sales during the second half of the year were expected to be higher than 2019 due to the introduction of the MBRS project and the new upgraded ice cream tools, both of which were delayed due to the pandemic.

It said sales for the Global One-Pak division were hit particularly hard due to running out of stock, as all stock is manufactured in China and delivery after the Chinese New Year holiday did not resume until May, with deliveries getting to the company in June.

The tooling of its multi-box recycling system was delayed due to the pandemic, as the tools arrived onsite in September, with production beginning in November.

For its new, improved food packaging, Coral said the tooling was ready to go for the summer period, but due to lockdowns, “very little” production of ice cream tubs occurred.

Flame retardant plastic-moulded roof tiles for the construction industry, meanwhile, were put on hold by the customer due to the pandemic.

“This current trading period has been one of the most difficult I've ever experienced, with Brexit, the United States-China trading wars, the general election and the Covid-19 pandemic,” said chairman Joe Grimmond.

“The net effect of all these culminated in a steep reduction in sales in the second half from our budgeted expectations.”

Grimmond said it was continuing with its strategic progress of increasing focus on value-added and innovative products, particularly in the food container, recycling, telecommunications, rail industry, home delivery totes and blow moulding areas.

He said its aim was to build a significant plastic moulding business with a bias towards using recycled materials produced by its recycling unit in Haydock.

The current year would benefit from the Coral Mouldings and Tatra-Rotalac cost reductions and new business, Grimmond added.

“Our group is facing a crisis that is unprecedented, but we believe that our balance sheet and margins mean that we can mitigate the effects.

“The crisis will pass at some point - at that time, it will be the work we do to move the business forward that will determine our future success.

“So, our priorities being clear - to do all we can to keep our workplaces as safe as possible for staff, secure the cash resources of the business, and continue to develop our product ranges throughout the next financial period.”

At 1126 GMT, shares in Coral Products were up 31.46% at 7p.