Flowtech Fluidpower revenue falls in 'challenging' year
Flowtech Fluidpower updated the market on its trading in 2020 on Tuesday, reporting that in line with the “challenging” market conditions it had experienced as a result of the Covid-19 pandemic, it was expecting to report revenue of £95.1m for the year.
That would be a 15% reduction against its 2019 turnover of £112.4m, with the majority of that reduction seen in its components division.
The AIM-traded firm said that, prior to the first national lockdown in March, and in particular the closure of certain customer sites, revenue was “slightly ahead” of expectations.
It said the impact of the pandemic resulted in April revenue being 41% down on the same month in 2019, and the second quarter down 33% on the prior year.
Since April, it said its revenues had recovered, with the first half down 22% year-on-year and the second half down 8%.
The board said that data it obtained from the British Fluid Power Association, relating to the period up to November, suggested it had achieved a “modest increase” in market share in 2020.
Net debt as at 31 December was £11.7m, comprising £10.8m net bank debt and £0.9m of Covid-19 related support from HMRC, which would be repaid by the end of March 2021.
That represented a £4.9m reduction compared with the £16.6m it reported at the end of 2019.
Flowtech’s “continued focus” on working capital management, combined with a small underlying profit, had underpinned its result, the board explained, adding that the trend of cash generation was expected to continue into 2021.
The company renewed its banking facilities in November, and now had continuing aggregate £25m facilities in place for a three-year period.
It said the covenants had been adjusted to align with current trading conditions.
Despite the difficulties presented by Covid-19 restrictions, the board said it had completed all the cost reductions outlined in its half-year report.
However, the lockdown measures and working from home environments, combined with restrictions on travel, had meant it was not possible to progress with some of the further identified cost reductions, though it would complete the remaining areas in 2021.
Looking ahead, the company said the continued progress it had made with reducing underlying operating costs had ensured that financial performance had, in the circumstances, remained satisfactory and provided a good base for the future.
However, it said it remained difficult to forecast accurately given the ongoing impact of, and uncertainty caused by, the pandemic, and thus the board said it would continue to keep its dividend policy and reinstatement of formal earnings guidance under review.
“In what has proven to be an extremely difficult year the wellbeing of our staff and the protection of the business have been our two key priorities,” said non-executive chair Roger McDowell.
“I am pleased to report the senior management team, supported by everyone throughout Flowtech, have delivered on both counts.”
McDowell said the continued focus on cash had put the firm in a healthier position to deal with the prevailing market conditions.
“Whilst not underestimating the difficulties, we are cautiously optimistic of improving performance in 2021.”
At 1125 GMT, shares in Flowtech Fluidpower were down 10% at 96.75p.