Ultraframe PLC has given its managing director notice as it warned first half profits will be significantly lower than a year earlier and that full year results will fall short of management expectations. Shares dropped 15% to 194p on the announcement and analysts cut their profit forecasts by as much as 20%.
The company said it is taking action to turn itself around and that it is confident in the long-term future of the group. Despite the expected fall in profits, the group said it expects to pay unchanged dividends for the current year.

Nick Gale, managing director of Ultraframe (UK) Ltd, will step down from the group's board with immediate effect and has been given notice under the terms of his contract. The group said it is seeking a replacement to head the UK business, but in the meantime group chief executive David Moore will take direct responsibility for the UK operations.

In the statement made at the Ultraframe Group's AGM on 23rd January 2004, the company said turnover from continuing operations in the UK was down 8% from a year earlier in the first quarter of the current financial year and that in North America, first quarter dollar sales in the group's core sunroom business were 3% up.

The Board had previously drawn attention to the challenging conditions in the UK market and its plans for developing the US market. At the AGM, the Board also reiterated its view that the outlook for Ultraframe in 2004 was unchanged, with growth in the US not anticipated to compensate fully for a decline in UK sales. Sales in both the UK and US have, however, declined significantly in February, leading the Board to conclude that half year profits will be significantly less than those achieved in the first half of the previous financial year.

The group said trading conditions in the mainstream market segments, that account for the majority of Ultraframe's UK business, remain sluggish. The Company suffered a significant decrease in sales in February compared to the same month last year, which combined with January led to a decline of 16% on a comparative basis for the first two months of the second quarter. Overall, the year on year comparative trend for the first five months of this financial year was down 11%.

The smaller budget segment of the market continues to see higher growth, with intense competition and customer churn as market participants compete aggressively for market share. Uzone, which Ultraframe has developed specifically for this market, will be competitively priced and is expected to gather sales momentum in the second half, as previously announced. Other products targeted at this budget segment will be launched during 2004. Finally, given the strength of the Group's intellectual property portfolio, the Company will continue to protect vigorously its intellectual property rights and to pursue strongly any infringements of its products.

Source

Glass Age