Packaging manufacturer Robinson has revealed a restructuring program as profits for the start of 2023 sit “substantially below” those seen in the first five months of 2022.
The firm says it comes despite substantial sales price increases with customers, with Robinson having been unable to cover the full inflation in costs in the period, due to a reduction in sales volume.
The business has consequently implemented a restructuring program which will result in exceptional costs of £0.4m and annual savings of £0.7m, of which £0.4m will benefit 2023.
Sales in the first five months of the year were 2% below the comparative period in 2022. While after adjusting for price changes and foreign exchange, sales volumes are 11% lower, of which 4% is due to a major UK customer experiencing a supply chain issue. The company said that whilst it is unlikely to recover the lost sales in 2023, it expects to return to the normal run-rate on these products.
The Chesterfield-based firm noted that it is also seeing reduced demand due to inflation and the cost-of-living crisis.
The group however expects to deliver full year adjusted operating profit in line with current expectations and ahead of 2022.
Looking ahead, in a statement to London Stock Exchange, Robinson said: “We expect the substantial macroeconomic uncertainty and volatility experienced since the beginning of 2021 to continue throughout 2023.
“We are seeing more new business activity with our existing and potential customers, which provides opportunities for additional sales in 2023 and beyond. In particular, the previously announced new contract in Denmark requires substantial investment in the current year but will begin to benefit sales and profit from 2024. We have a portfolio of opportunities, close to completion, which if converted would comprise more than 10% of annual sales.
“Given the ongoing pressure on volumes, input prices and margins, the Board will continue to prioritise the management of costs and cashflow.
“Despite the ongoing uncertainty, with the current restructuring programme, we expect adjusted operating profit in the 2023 financial year to be ahead of 2022 and in line with current expectations. We remain committed in the medium-term to delivering above-market profitable growth and our target of 6-8% adjusted operating margin.”
