PM Group Plc, which produces vehicle weighing equipment for both waste management and haulage companies, said it could face a management buyout following a drop in sales of its WasteWeigh product.
”Whilst growth was seen in the sales of our products into the bulk haulage markets, lower sales volumes were experienced in the waste markets“
– Ken Jackson, PM Group Plc chairman
The Bradford-based firm said it was “unlikely” to achieve forecast profits for the year ending June 2007 and blamed “political uncertainty” over plans to make people pay for the amount of rubbish they throw away.
Writing in a trading statement this month, PM Group explained that the prospects for the company were deemed “poor” in September.
The company said: “One reason for this lack of demand for the Waste Weigh product is the current political uncertainty surrounding the progress of “Pay by Weight” and its effect on sales of our onboard weighing products designed for the waste management sector.”
PM Group added that demand for weighing equipment dipped even more this month, causing the company's board to “reduce further its expectations for the onboard weighing division”. The change was “largely” attributed to reduced sale prospects for its WasteWeigh product.
The system uses loadcells positioned on chassis of vehicles to sense the weight differential of bins and read an individual microchip number in each bin, which is recorded on a computer displayed in the vehicle's cab.
PM Group Plc said: “As a result it is the Board's view that the Company is unlikely to achieve the current market forecast profits for the year ending 30 June 2007.”
Buyout
As a result of PM Group's problems, its non-executive directors have begun to conduct a strategic review for the company's future direction either through a sale or management buyout. They have agreed to allow the executive directors to pursue a possible management buyout of the company.
However, the company stressed: “there is no certainty at this stage that this will lead to am offer for the company.”
A further announcement, regarding the outcome of the strategic review and any progress with regards to a possible offer from the executive directors will be made in due course.
Writing in the company's annual reports and accounts in September, PM Group chairman Ken Jackson revealed that weighing equipment profits were already suffering last financial year.
Mr Jackson said: “In the UK, whilst growth was seen in the sales of our products into the bulk haulage markets, lower sales volumes were experienced in the waste markets, resulting in an overall fall in weighing sector sales of 12%.”
Link to PM Group Plc's financial report for the year ending June 2006
Register for free to comment