The Ossett-based firm has issued a strategy update ahead of the group announcing its results, for the year-ended March 31 2019, on July 23.
The update said: “Overall, group performance in the first weeks of the current financial year, and group net debt levels, have been broadly as anticipated.
“The technical plastics and aerospace divisions performed strongly but operating losses at Wipac, the main operating business in the group’s LED Technologies Division, have increased, with the business continuing to incur additional costs to meet growing customer demand.”
The statement added: “In light of the ongoing challenges, and in order to establish a more sustainable platform for Wipac, the board is reviewing the strategy for the business, in particular the move into the mid-volume vehicle market, which is placing significant strain on the group.
“As part of this review, Wipac is working with its customers to develop a plan to refocus the operation on its historic low-volume vehicle markets where it had previously been financially successful.
“This plan might involve customers moving some programmes to alternative suppliers. Once implemented, the revised strategy is likely to have the effect of reducing Wipac’s future sales revenue but would also, consequently, significantly reduce the group’s cash requirements for working capital and capital expenditure. The board expects to be able to provide more detailed guidance on the financial implications of the revised strategy at the time of the full-year results announcement.”
Discussions remain ongoing with the bank and other stakeholders in relation to the refinancing of the group’s borrowing facilities which are due to mature in March 2020. An interim chief restructuring officer has been appointed to assist with these discussion, Carclo said.