Profits boost for Chapelthorpe

Fibres and coatings group Chapelthorpe said today it intended to start paying dividends again as it moved back into profit.

The Wakefield-based manufacturer said it wanted to recommence dividend payments from February next year.

Profit before tax for the year to March 31 was 700,000, compared to a 3.3m loss for the previous 12 months.

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Leslie Goodman, chairman, said: "In a difficult economic climate we have delivered a significantly improved financial performance with all of our businesses continuing to be profitable and cash generative."

Chapelthorpe said it had seen a strong margin improvement due to an improved mix in Europe and strong market share gains in filament yarns in the US, despite continued weak demand in its key US staple fibre sector.

Earnings before interest, tax, depreciation, amortisation and exceptionals were up 2.6m to 5.4m.

Net debt is down to 3.4m from 6.7m but its UK pension deficit was hit by falling corporate bond yeilds. The black role rose from 2.2m to 6.9m.

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Mr Goodman added: "Our strategy is to maintain and develop the leading market positions of our fibres businesses.

"The focus is to expand our portfolio of niche high value added technical products and to increase our products coverage into emerging markets.

"In the current economic climate we anticipate that the capital investment requirements of the existing businesses will be modest and that we should be able to yield good cash returns into the medium term, enabling us to reduce borrowings even further."

The US fibres business saw sluggish demand from two of its main market sectors - automotive and needlepunch - in the first half.

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Activity improved "a little" in the second six months but overall staple fibre volumes were down by 5 per cent year on year.

The firm said this was compensated for by new business in the filament yarn sector with volumes up by 35 per cent year on year and it invested in new machinery.

There was a similar pattern of trading in Europe, it said.

"In Europe the pattern of trading in the second half was similar to that experienced in the first half with improved mix contributing to better margins overall, notwithstanding the continued rise in polymer prices.

"The weakness of sterling also helped improve demand and profits in our UK business."

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Polymer prices rose by nearly 50 per cent during the year and are currently approaching the record highs of 2008.

The firm said it had managed to recover much of the increase but added: "with the price still rising, our ability to pass on all of these rises becomes increasingly constrained".

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