Plastics firm Carclo has reported increased losses at its supercar lighting division Wipac and has launched a strategic review of the business.
The Ossett-based firm said this will look at the group’s move into the mid-volume vehicle market, which is placing significant strain on the group.
As part of this review, Wipac is working with customers to develop a plan to refocus on its historic, low-volume vehicle markets where it has previously been financially successful.
It said this plan might involve customers moving some programmes to alternative suppliers. Once in place, Carclo said the revised strategy is likely to reduce Wipac’s future sales revenue but would also significantly reduce the group’s cash requirements for working capital and capital expenditure. Wipac is continuing to incur additional costs to meet growing customer demand.
Overall, Carclo said group performance in the first weeks of the current financial year have been broadly as anticipated. It said the Technical Plastics and Aerospace divisions performed strongly.
Analysts at FinnCap said in a note: ”The business needs to be stabilised and the potential exit from the mid volume areas appears a sensible retrenchment.
“The shares continue to decline and are now down 51 per cent in the last three months. Until greater clarity on loss elimination and the refinancing is known we stand aside from this stock, though Technical Plastics remains profitable and growing, so at some stage it will become more interesting again – just not yet.”