Tuesday, engineering and manufacturing company Tomkins Plc (TKS,TOMK.L), in its interim management statement for the period from January 4 to May 11, said it anticipates sluggish performance in the first half of 2009 compared with last year.
However, the company sees a comparative easing for the second half on the benefits of restructuring projects as well as an anticipated abating in the end-markets decline.
Upper Richmond Road, London-based Tomkins operates in two segments namely Industrial and Automotive as well as Building Products.
Industrial and Automotive business group's first-quarter volumes continued to drop on a global basis, the company said. In addition, North America automotive original equipment, or AOE, business in the first half is expected to be hurt by further plant shut downs announced at Chrysler and General Motors. Production volumes are estimated to decline 45% year-on-year in the first half.
Meanwhile, global automotive aftermarket sales for the quarter were in line with the prior-year quarter. Industrial aftermarket businesses were affected by reductions in overall industrial activity, the company added.
In the Building Products segment, quarterly revenues for the Air Systems Components business declined marginally from the comparable quarter a year ago. Tomkins, however, noted that for Other Building Products, business residential housing, recreational vehicle and manufactured housing markets showed deterioration, as previously indicated.
Commenting on the outlook, Tomkins Chief Executive Officer James Nicol said, "Our performance continues to be adversely affected by the global economic slowdown and its negative impact on most of our end-markets."
Looking forward, the company sees a comparative easing in the second half of 2009, attributed to the benefits of restructuring projects together with an anticipated slowdown in the rate of decline in many of its end-markets. Additionally, Tomkins expects challenging conditions to persist in most of the end markets throughout the remainder of 2009.
Industrial markets in North America are expected to fall nearly 20% in both the original equipment and aftermarket sectors. Further, the company anticipates European industrial markets to mirror the weakness in the North American markets.
Industrial activity across the remainder of Tomkins' geographic markets is expected to slump year-on-year, partially offset by some early improvements in India and China.
North America's automotive aftermarket is projected to remain broadly on par with the prior year. The company expects the European automotive aftermarket to demonstrate a similar trend to North America. Sales in other geographies especially in China and Brazil are also expected to be broadly in line with the prior year.
AOE production in North America is expected to decline by nearly 30% in 2009. Production volumes are projected to decline approximately 25% year-on-year in the second half of 2009. The company expects Europe AOE production to drop nearly 20% in 2009 and sees some benefits from the impact of Government-backed scrapping programmes.
AOE production in both China and India is estimated to achieve mid single digit percentage growth in 2009, the company added. Production in Brazil is expected to decline by mid single digits on a percentage basis. Further, certain benefits are expected from the impact of scrapping programmes in a number of these markets.
US Non-Residential Construction is expected to decline by nearly 25% on a square foot basis and about 20% on a value basis in 2009. Residential Construction, measured by housing starts, is expected to decline by approximately 30% in 2009.
As of April 4, the company's net assets were $1.62 billion compared with $2.34 billion as of March 29, 2008. Net debt was $582.8 million compared with $682.6 million as of March 29, 2008.
TKS ended Monday's regular trading at $9.87 on a volume of 1,900 shares on the NYSE. In the past 52 weeks, the stock traded in a range of $5.22 to $15.25 with a three-month average volume of 210,744 shares.
TOMK is currently trading at 161.75 pence, down 3.25 pence or 1.97%, on a volume of 5.54 million shares on the LSE. In the past 52 weeks, the stock traded in a range of 89.75 pence to 195 pence, with a three-month average volume of 6.17 million shares.
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