Molins Makes Disappointing Start

Source from:  Tobacco Reporter 09/01/2010

Molins' sales during the six months to the end of June, at £40.3 million, were down from $42.2 million during the first half of 2009. At the same time, tobacco machinery sales were down from £18.7 million to £15.3 million. Order intake in the tobacco division for new and rebuild machinery was described as being particularly disappointing during the period under review. "A number of orders that had been expected to be received have either been delayed or will not be placed," Molins said in presenting its results. "The consolidation of manufacturers and rationalisation of production capacity has resulted in uncertain market conditions, which has led to customers exercising greater caution when placing equipment orders, although prospects for the Octave cigarette making machine remain positive." "The lower order intake impacted sales in the first half of the year, and as a consequence, together with the effect of reduced activity and an adverse mix, the division returned an operating loss in the period, before exceptional items, of £0.4m (2009: £1.5m profit)." "Plans to reduce the employment levels in a number of the division's sites were announced in July, and these are expected to lead to a reduction in the number of employees in the division of approximately 50 people, which together with some reorganisation made in the first half of the year, would represent a reduction of approximately 20 per cent since the start of the year." Scientific Services division sales during the first half of this year, at £10.0 million, were down from those of the first six months of last year, £10.2 million, while operating profit was down from £1.2 million to £0.8 million. "Sales at Cerulean were maintained at similar levels to the previous year, although order intake, as expected, reduced by approximately 10 per cent, reflecting the particularly high incidence of orders for one-off projects experienced last year," Molins said. "Profits at Cerulean were maintained at similar levels." "Performance at Arista Laboratories was weaker than last year, with sales patterns tending to be less consistent, resulting in reduced cost efficiency." "US legislation enacted in June 2009 placed the regulation of tobacco products with the US Food and Drug Administration, with test results required from June 2012. The testing regime has yet to be defined. Arista's management continues to monitor, and where appropriate contribute to, the development of the regulatory system. It is expected that the change in regulation will lead to increased business opportunities for Arista in the medium term." Overall, Molins made an underlying operating profit of £0.8 million during the six months to the end of June, down from £1.4 million during the first half of 2009. Profit before tax from continuing operations was increased from £0.6 million to £1.7 million, and the profit for the period was up from £0.1 million to £1.1 million. Enditem