Plastic pipe firm operating at 70 per cent below normal demand

PLASTIC PIPE systems manufacturer Polypipe said it has been operating at approximately 70 per cent below normal demand following the coronavirus outbreak.

The Doncaster-based firm said that this was supplied mainly from existing stock and was driven by urgent NHS and carerelated activity as well as some ongoing infrastructure and commercial work, and essential repair, maintenance and improvement.

Polypipe has implemented a range of measures to reduce costs and conserve cash following the outbreak.

It has furloughed around 60 per cent of its workforce. It has also curtailed its capital expenditure, which was expected to be around £25m for the 2020 financial year.

On March 25, the business cancelled a final dividend payment for the 2019 financial year, saving itself £16m.

At the time, CEO Martin Payne said: “In these unprecedented times we have acted swiftly and decisively, taking our decisions with the best interests of our employees and customers foremost in our minds.

“The group’s strong balance sheet and cash generation, together with our talented people and clear strategy gives the board confidence that it will overcome whatever challenges await.”

It has reduced base salary and fees for both executive directors and non-executive directors by 20 per cent.

Polypipe also announced its intention to conduct a non-preemptive placing of new ordinary shares to raise total gross proceeds of around £120m.

Management will be participating in the placing. This placing should enable it to come out on the front foot and ensure it can continue to invest in the business.

The firm says it has analysed a range of scenarios primarily based on assumptions regarding the period of lockdown and level of activity subsequently in the group’s residential and commercial and infrastructure divisions.

The analysis focused on two potential scenarios, both showing that levels would be down on the previous year due to the Covid-19 disruption.