Ennstone: warning on deteriorating performance

Ennstone has warned that it is “facing highly volatile and challenging trading conditions”.

In a statement on the Stock Exchange this morning, the quarrying and aggregates group said there had been a sharp downturn in its UK markets.

Trading in recent weeks has shown “a further marked deterioration” in the group's performance, particularly in its English business (Ennstone Johnston) as margins have come under pressure, and in its Scottish business which has been adversely affected by severe weather.

“In the short-to-medium term, the board intends to implement a series of cost reduction measures,” said Ennstone. “With no likely improvement in the trading environment, the group is likely to be substantially behind current market forecasts for the year.”

Ennstone’s financial year runs through to December.

Because of tightening credit terms, Ennstone’s cash position has also worsened. This has triggered a speeding up of the disposal programme of surplus assets. Also an equity fund-raising move is on the cards.

Ennstone’s statement added that it does not believe that its covenants or US banking facilities will be breached at the September test date “unless there is a further unexpected deterioration in the group's trading in the next two weeks”

However the group is “continuing its constructive discussions with its principal banks”. 

One potential buyer has been given an exclusivity undertaking to one party in relation to the sale of its Pennsylvania business.