Shares n Carclo, the wires and plastics group, fell more than 10 per cent yesterday after it issued a profits warning and announced it was shutting three factories in the UK with the loss of 140 jobs.
The company said demand for technical plastic from its UK customers has fallen over the new year period as manufacturers shifted their operations overseas to Western Europe and Asia. The announcement will dent hopes that the UK is on the brink of a firm rebound in manufacturing after a three-year slump.
Carclo said second-half operating profits would be "modestly below expectations" and the company would have to take a £3.5m charge for shutting the three plants. Its shares closed down 4p at 43.5p.
The three plants being shut are a tooling factory in Burgess Hill, Sussex, a small site at Hatfield, Hertfordshire, and a factory at Harthill, near Glasgow. Ian Williamson, Carclo's chief executive, said the closures followed a three-year decline in demand for plastics for electronic office and telecoms equipment within the UK. "This is not a 'shock horror' issue, although obviously it's a sad day."
He said UK demand for its medical and optical plastic had continued to grow, while demand for its automotive components had declined but at a much slower rate than for electronics. According to industry surveys, manufacturing activity was running at a four-year high in January and February. "That may be true but it's not what I'm seeing," Mr Williamson said.
The restructuring would allow the company to boost investment in its portfolio of new products and process development, and improve its long-term profitability.
Analysts, who lowered forecasts in October after the company said first-half profits would be hit by weak demand, were expecting pre-tax profits of about £1m for the year to 30 March.