Standex sees no let-up in dire UK conditions

Foodservice equipment manufacturer Standex said this week that it expects poor market conditions in the UK to persist.

The company indicated that while sales of products from its Cooking Solutions portfolio were seeing an “incremental improvement” in North America, there was little sign of respite this side of the pond.

Standex did not give any further details, but the latest reference to the UK business highlights the ongoing challenge it faces given it has lamented “soft” demand in the UK grocery market during its last three quarterly financial releases.

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Overall global sales from Standex’s Food Service Equipment division rose 2% for the three months to the end of June, according to fiscal Q4 figures published this week. Operating income snuck up 0.2% on the same basis.

CEO Roger Fix, who announced earlier this month that he will retire from his position upon the appointment of a successor, insisted that imminent strategic changes would lay the foundations for future divisional growth.

He stated: “Looking at the food service group as a whole, during fiscal 2014 we’re undertaking two major projects – one in Refrigeration to diversify our customer base and introduce new lower cost products, and one in cooking to consolidate our operations to gain significant cost savings. These actions should have a significant effect on our growth and profitability at our Food Service segment in fiscal 2015.”

The consolidation of the cooking operations will see Standex’s plant in Wyoming, USA, folded into its Mexico facility, as well as into other Cooking Solutions operations in North America.

It expects the move to cost it $7.5m to $8m (£4.5m to £5.1m) in the next fiscal year, with $3m (£1.9m) of the charge set to be a non-cash impairment of the building. However, the action should deliver savings in the range of $4m to $4.5m (£2.6m to £2.9m) a year.

“We expect the consolidation to be substantially completed by the end of fiscal 2014, and to benefit from about 75% of the savings in the first half of 2015 and from the full annualised run rate in the second half of that year,” revealed Fix.

The company also plans to open a new finished goods distribution centre for its Cooking Solutions products in Dallas within in the next few months, which it hopes will improve customer satisfaction and working capital management.

Standex’s overall global sales for the latest quarter increased 8% year-on-year to $183m (£118m). Net income from continuing operations fell slightly from $13.5m (£8.7m) to $12.7m (£8.2m) during the quarter.

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