In an interim statement covering the period from April 29 to July 6, Fenner management said the conveyor belting division continued to hold up, thanks largely to coal business.
“However, with the tightening of customers' budgets, we are experiencing a temporary slowing of order patterns following the strong demand flows in the early part of the year. Notwithstanding this, our current order books remain at a level sufficient to give reasonable forward visibility at most operating units,” Fenner said.
It said a new steel cord facility in Western Australia had recently been successfully commissioned on time and to budget.
The industrial businesses, which includes most of the Advanced Engineered Products division and approximately one-third of the Conveyor Belting division, while affected by the deterioration in global economic conditions, was showing recent signs of slow improvement with activity levels in the medical and wind power markets.
“Demand from original equipment manufacturers continues to be affected as destocking has been exacerbated by the reduction in underlying economic activity; however, the increase in enquiry levels coupled with a levelling of the rate of order decline gives reassurance for the future.
“Our seals business has experienced a slowing down from the oil sector with the fall in energy prices and reduced drilling activity against a background of modest increases in demand in other sectors, reflecting initial signs of a renewal of underlying activity.”
Fenner recorded exceptional costs of £5 million in the third quarter from cost-reduction and reorganisation programs. It said the programs would result in more costs this year.
Looking ahead, Fenner said the diversity of its global markets, together with its ability to flex activities to meet market conditions, meant the outlook for the full year would be towards the lower end of market expectations.
“While uncertainty still persists, we are encouraged by signs of improvement and are well positioned, with a significantly reduced cost base, to benefit from a recovery in economic conditions.”
