Carclo turns a corner in car lights expertise
PLASTICS FIRM Carclo reported strong trading at its LED Technologies division, which provides lighting for top of the range luxury cars such as Aston Martin, Lamborghini and McLaren.
The Ossett-based group said an out-performance at its LED Technologies division is expected to offset a weaker than expected performance at its Technical Plastics division.
It said that trading in the year to March 2018 is in line with expectations.
LED Technologies reported an encouraging first half, performing ahead of expectations. The group’s Wipac business saw good product sales on various supercar lighting programmes.
New business activity in the division grew ahead of expectations and customer audits of its mid volume programmes have confirmed it is well advanced with preparations for manufacturing and it is meeting their high expectations.
Carclo recently launched a new lighting product for top of the range supercars that will enable drivers to see around the corner.
The product turns on LED lights when the steering wheel turns so drivers can effectively see around the bend.
Another new product in the pipeline is a laser light that can double the visible distance when the car lights are on full beam.
Carclo’s chief executive Chris Malley said: “When on full beam, drivers will be able to see double the distance. So when you’re driving down really dark roads you will be able to see what’s ahead.
“The technology is already there and now we have developed it to go into the upmarket niche area. We will launch it in the next couple of years.”
The firm said its Technical Plastics division had a challenging start to the financial year with new programmes being delayed until the second half and some operational challenges, which have now been largely resolved.
The group said the division’s performance is now much improved and it should have a considerably better second half of the year.
The Aerospace division is expected to have stronger sales in the second half of the financial year as new programmes move to serial production.
Carclo’s board said it anticipates that the group’s usually stronger second half performance will be more pronounced this year, driven by the out-performance of LED Technologies and an improved performance in Technical Plastics.
The group expects to deliver annual results in line with previous expectations and said it is confident that all divisions are well placed to make strong progress in the future.
Analyst David Buxton at FinnCap said: “The group’s AGM signals that it is trading in line with full year expectations, but with a more pronounced weighting towards the second half, with some improvement in performance at Technical Plastics after a weaker start to the year and also the continued out-performance of LED Technologies.
“No change to forecasts, with a maintained price target of 165p now pointing to upside of less than 10 per cent. We therefore move from a ‘Buy’ to a ‘Hold’ rating.
Analyst Jon Lienard at N+1 Singer said: “Overall expectations for the year are unchanged but the first half has seen challenges in the Technical Plastics division.
“The second half weighting is to be more pronounced than usual but will rely on a much improved performance from Technical Plastics. On the assumption that the operational issues are effectively resolved and encouraged by the LED performance, we remain at ‘Buy’ with a target price of 175p.”
Carclo said group net debt will be higher by the end of September, as anticipated, primarily due to the timing of capital investment and an increase in working capital.
The board expects group net debt to decrease by the year end.