API Group reviews future of Chinese operation

Laminate and film supplier API Group has said it will rethink the future of its loss-making Chinese operation as it indicated a drop in turnover for 2010.

In a trading update this morning that revealed an improvement in second-half sales, the group said that it had begun a strategic review of its Chinese subsidiary after “limited progress” was made in reducing losses in the business.

API owns 51% of the business in Shanghai, which produces foil at a newly-built facility. However, the group reported a £1.2m operating loss from the business in the first half of the 2009/10 financial year and a £2.6m loss in the previous full year.

The statement said that API expected to take a £2.6m charge on its Chinese business in the coming year.

Elsewhere, sales improved in the second half with, API said, a 10% improvement in sales compared to the first half’s figure of £40.3m.

That would suggest full-year turnover somewhere around £84m, compared to £93.5m in the 2008/09 financial year.

Profitability in Europe also “recovered strongly” in the second half, the group said.

In the statement, API said: “After a difficult first half, the Group’s performance in the second six months of the financial year was ahead of expectations and the Board now expects to report a positive result, at operating profit level, for the year as a whole.”

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