TenCate to streamline production in order to further reduce costs
01 Nov '07
5 min read
As regards the profit forecast for 2007 as a whole, a number of positive factors play a role in this: • the additional contribution of TenCate Thiolon Middle East in the fourth quarter; • the current orders for fire-resistant fabrics for the American defence market, which will be delivered up to the beginning of 2008; • a strong catch-up effect in orders for antiballistics in the fourth quarter. • deliveries of CETEX for Airbus will get under way again in the fourth quarter.
Despite the sluggish growth in profit in the third quarter, TenCate stands by its statement for 2007 made earlier that net profit (adjusted for the result on divestments) is expected to increase by at least 25%, barring unforeseen circumstances prospects until mid-2008.
In America and Europe TenCate has built up a leading position in protective fabrics. In addition to the positive developments in the US (fire brigade and army), there is growth in the industrial market in Europe.
As regards production in the Netherlands, TenCate will gradually streamline and modernize its production in order to further reduce costs.
The remaining part of the production of interlinings (Permess) in China will be closed, as it does not fit in our strategic portfolio. The financial effect of this is extremely limited.
The synthetic turf market is showing considerable growth worldwide (+15%), although large regional differences do exist. In America, growth in volume remained limited to 10% and projects were transferred to 2008 because of inadequate production capacity in 2007 for certain types of synthetic turf fibres.
The Grass group implemented a major changeover at the end of 2006 / beginning of 2007, in view of the (future) growth of the synthetic turf market as a whole and the strong increase in demand for monofilament (MF) fibres in particular.
The consequences of this process were felt most strongly in the production facility in the Netherlands. The production output has not reached the desired level as regards volume and costs.
The new product portfolio for this year, consisting of a larger share of MF fibres and combined fibre products (multifilaments), which integrate different functional characteristics, made adjustments necessary within the production processes.
The acquisition of TenCate Thiolon Middle East resulted in TenCate being able to secure a large part of the increased demand for MF products in 2007. In the year 2008 the product portfolio and the prices policy will globally be harmonized. Furthermore, for 2008 a plan will be drawn up for the Grass group as a whole so as to be able to serve the global market to maximum effect from three production locations.
In this connection, an investment plan has been approved for a substantial capacity expansion in the US and Dubai. In 2008 TenCate Thiolon Middle East will be the largest production facility within the Grass group. This plan is intended to result in considerably higher results in 2008.
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