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Interim trading update of Fiberweb plc

14 Jul '11

3 min read

Fiberweb plc, a leading international industrial fabrics producer, is today publishing a trading update, ahead of interim results for the six-month period ending 30 June 2011, which are expected to be announced in early August.

Fiberweb has seen reasonable trading in the first half with total revenues up more than 10%. We have seen strong volumes in our polypropylene spunbond hygiene business in Europe and through the FitesaFiberweb JV in the Americas, while trading volumes in the Airlaid business in Asia are below first half last year as a result of volume weakness from a major customer and previously highlighted delays in filling Line 2. In Industrial, filtration and European construction have seen strong volumes, while the US construction market has remained extremely challenging.

A sharp increase in raw material prices in the first half of 2011, coupled with contractual lag in hygiene pass-through and the normal lead-time for industrial price increases has caused some pressure on margins in the first half, with a net impact of more than £6 million. This has been partially mitigated through volume growth and further improvement in operational efficiencies and in mix. The raw materials impact is expected to be more than fully recovered in the second half as a consequence of contractual price increases in hygiene, the impact of several price increases already implemented in industrial sectors and cost control. Helpfully, raw material price pressure has ameliorated significantly in recent weeks and the opportunity has been taken to increase our polypropylene hedging positions during the recent period of price weakness. Polypropylene volumes for the European Industrial business are now largely hedged in the second half.

The acquisitions of Boddingtons and Tubex were successfully completed in the first half. The integration of both businesses is progressing well and is on-track to deliver at least expected annualised cost synergies of more than £1.5 million. We continue to review and assess possible complementary bolt-on acquisition opportunities, particularly in relation to our industrial business.

A maiden dividend of £1.1 million was received from FitesaFiberweb in the first half. After major capital expenditure on new manufacturing assets and a new R&D facility for the industrial business as well as restructuring spend associated with post-acquisition integration, net debt is in-line with expectations.

With the benefit of falling raw material prices and cost reductions, including the closure of sites in the UK and Germany, the Group's performance for the year is anticipated to be in-line with management's expectations.

Fiberweb