29 July 2011 – trading update
Straight has provided an update on trading for the six months ended 30 June 2011, ahead of the interim results announcement due on 27 September 2011. Sales increased 14% to approximately £15.0m (2010: £13.2m). These have been boosted by acquisitions made in 2010 and also by a significant increase in sales in the Retail Business. However, overall sales have fallen short of management expectations.
Polymer prices rose rapidly to unprecedented levels during the first part of 2011, peaking in May. This has been unhelpful given the recent stategy of the company and the profitability of certain contracts accepted prior to the rise in costs has been impacted. The recently acquired Powell Plastics operation has clearly been impacted. In the near term the share price is likely to move lower but we remain confident of long term prospects. A small headline operating profit for the first half is anticipated, which after reorganisation costs and interest, will result in a loss before tax of approximately £0.1m. Following a programme of remedial actions a return to profitability is expected during the second half of the year. For now we downgrade the shares to a HOLD.