Weather to put dampener on Sinclair's profits
The wet weather has prompted gardening products supplier William Sinclair to issue a profits warning.
The wet weather has prompted gardening products supplier William Sinclair to issue a profits warning.
The group said that the exceptionally unfavourable weather of late has continued to suppress consumer activity, preventing any peat harvesting operations in July.
Although Sinclair developed artificial peat drying technologies, which performed well this year, the extent of the recent wet weather has meant the demands placed on it has exceeded its capacity. The firm will now substantially increase its drying capacity by commissioning further drying machines and this extra capacity will come on stream in November this year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The company also confirmed that the purchase of a second SuperFyba processing line will comprise a full cleaning line together with two new extruding machines rather than only one, to be commissioned at Ellesmere Port site, which has the advantage of having access to industrial scale mains electricity supplies which will generate significant cost savings for the production of SuperFyba, a peat free product which has been used in the Olympic Park in East London.
The effect of this investment will be to double annual SuperFyba production capacity, which will come on stream in December 2012.
In a statement the group said: "The combination of increased SuperFyba production and peat drying will ensure the company can fulfil its obligations to its customer base over the long term. However, because of the time required to establish this production, the company will be forced in the very short term to scale back bagging operations and to buy in some peat from third party suppliers at a substantial price premium.
"The inefficiency associated with volume changes and the higher material costs will mean that even with an assumption of normal weather patterns for August and September the company will not now meet the market's profit expectations for this financial year. While selling prices across the industry are likely to go up, the company will still feel some effect from the shortage of raw materials during the next financial year."
Sinclair stressed that it continues to have a strong balance sheet and expects to maintain its dividend policy.
The share price fell 8.6% to 143.50p by 11:44.
NR
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Best funds to add to your ISA or SIPP before the Budget
With Labour expected to increase taxes, ISAs and SIPPs could be a great way to protect yourself from CGT hikes. We look at the best funds to buy now
By Katie Williams Published
-
Starling Bank slapped with £29 million fine over ‘shockingly lax’ financial crime controls
The Financial Conduct Authority has fined Starling Bank £29 million over failings related to financial crime and its financial sanctions screenings
By Kalpana Fitzpatrick Published