Baldwins Industrial Services, the UK crane hire and heavy lift contractor listed on the London Stock Exchange, issued the following profits warning on 15 September 2000.
“The Board of Baldwins Industrial Services PLC, whose interim results for the six months ending 30 September 2000 are expected to be published in November, announce that the group’s operating profitability in recent months has been materially below expectation.
The shortfall has arisen for three principal reasons. In the UK, revenues year-to-date are approximately 10% below expectation, or broadly in line with 1999/2000 turnover. Because of the high fixed cost nature of Baldwins’ business, this is having a disproportionate impact on operating profits. In response, Baldwins has been moving equipment out of the UK, notably to the United States and Venezuela, where it is able to achieve better utilisation rates and margins. This has, however, been to the short term detriment of profits during the period that the cranes have been in transit. In the United States, where the group is establishing a network of depots and sales offices, sales are progressing toward plan but the costs incurred in creating this network mean that it is not yet profitable.
Utilisation levels of our equipment in the UK are beginning to show signs of recovering to more acceptable levels. Those cranes moved overseas are now back in commission, employed on long term, dollar denominated contracts. The Board remains convinced of the long term potential to expand profitability into the United States and Gulf of Mexico regions.
Despite these improvements the Board believes that, in the absence of a more pronounced market recovery, the outcome for the year as a whole will be significantly below current market expectations.”
