Plastics Capital plc (UK, London Alternative Investment Market AIM: PLA) announced it expects fourth quarter 2009 and full fiscal year results -- through March 31 -- to come in approximately as forecast.

However, the company still plans some employment cutbacks to balance its workforce with declining sales. Also, it will sell off a small operation, Mulberry Plastics, as non-core. Recently acquired, Mulberry is the former Trimplex flooring products in Dartford, Kent.

Plastics Capital otherwise expects to continue taking advantage of a pricing advantage which has developed due to currency effects, and adjusted its banking arrangements to allow more flexibility against those unpredictable currency fluctuations.



Founded in 2002, Plastics Capital was formed to acquire plastic component manufacturing businesses, the "leading players in global niche markets." Currently, there are five business units, operating autonomously. BNL Bearings is a particularly important portion of Plastics Capital's business. Plastics Capital acquired BNL Bearings in 2005.

BNL's founder, David Garnett, is widely acknowledged as the inventor of the molded polymer bearing (BNL, or "Bearing No Lube"). Mr. Garnett developed the molded polymer bearing idea when he worked for Koyo. He left Koyo in 1970 to found BNL Bearing. Mr. Garnett passed away in 2003.

BNL is a world leader in lubricant-free thermoplastic rolling element bearings, producing approximately 70 million bearings each year. It is also a leading automotive Tier 1 supplier of custom plastic bearings for various in-car applications. The bearings usually have integrally formed shafts, gears or mechanical assemblies, and are found in most photocopiers, office machines, signs, cameras, computer scanners, food processing equipment and chemical processing equipment.

Because the Group's manufacturing operations are largely located in the UK, the pound sterling's ongoing weakness, particularly against the Euro, U.S. dollar, and Japanese Yen, has made Plastics Capital's products relatively less expensive in export markets. The weaker pound is particularly important because exports account for more than half the group's sales.

In order to best leverage that pricing advantage right now, the company said export-focused sales and marketing activity remains at high levels as, "opportunities for each of the Group's subsidiaries to win new business continue to be substantial."

Faisal Rahmatallah, the company's Executive Chairman, said: "The Group remains relatively resilient in the face of the global downturn. By maintaining export focused sales and marketing activity, we are well positioned to benefit from sterling's weakness when global demand picks up."

Plastics Capital said it has also reached an early agreement with its bankers, the troubled Royal Bank of Scotland (RBS). "Minor amendments" have been made to its 12-month borrowing arrangements in order to give more breathing room by easing restrictive covenants and restrictions on cash management, as it pays down borrowings.

The company said the, "amendments were considered prudent given the significant volatility of the sterling in recent months, and the impact that this volatility could have on covenant calculations and short-term hedging costs, at a time when trading conditions, as indicated on 19 February 2009 have been, and may continue to be difficult. The costs associated with amending these facilities were not significant."

Mr. Rahmatallah said: "The amendments to our banking facilities now agreed with RBS provide us with greater flexibility over the next 12 months. We are pleased with the ongoing support provided to the Group by RBS. The need for relatively minor amendments and our ability to secure them emphasizes the underlying strength of our businesses."

Plastics Capital has five factories in the UK (Knaresborough, Dartford, Wellingborough, Poole, Dunstable), a new BNL Bearings plant in Thailand which has only recently come online, and sales offices in the USA and Japan. Sales cover more than 70 countries worldwide.

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