Hull specialist plastics producer Nippon Gohsei swung back to profit in fine style, with a £12.6 million turnaround in fortunes on the back of a 10 per cent sales increase.
The Japanese-owned Saltend operator produces ethylene vinyl alcohol copolymer, a plastic with high gas barrier properties used for food packaging and fuel tanks.
And the former has given directors confidence in a further turnover boost in 2021 as supermarkets went into overdrive in lockdown.
A shutdown and backdated royalty charges had seen Nippon Gohsei record a £4.5 million loss in 2019, but for the year to March 30, the 126-strong team recorded a £8.3 million profit on a turnover of £129.5 million. It was up 9.8 per cent from £117.9 million - having remained virtually static in the previous year.
Director Peter des Forges told how the plastic was sought after, and underlined how it works with clients to develop new product grades and production facilities.
“The overall market demand for EVOH continued to grow and we continue to work with our customers in developing new applications,” he said in the strategic report, just published alongside the results. “Despite increased competition the company managed to maintain its competitiveness and increased sale volume in the year.”
Looking ahead, he added: “The company is cautiously optimistic for continued steady growth.”
Part of Mitsubishi Chemicals Corporation Group, and closing in on 100 years of global activity, Nippon Gohsei’s East Yorkshire plant emerged in 2001, with commercial operation starting in 2004. It selected Saltend due to the feedstock produced by neighbouring BP, in the process of being acquired by Ineos.
Signing off the accounts in late June, Mr des Forges told how Covid-19 would see a “likely short term increase” as demand for supermarket food products ramped up, due to the lockdown closures of restaurants and cafes. He said production facilities and supply chains had adapted to ensure no disruptions. At Saltend “specific measures have been implemented to increase the workforce resilience and to ensure adequate protection for our people”.
On Brexit, with the vast majority of the products destined for the continent, he told how the business benefits from priority status on imports and exports at UK ports, with “access to ample storage facilities in the EU in which we could store products for sale”.
The return to profit came despite a further royalty charge of £8.6 million, following 2019’s £18 million pay-out. Four more employees joined the team at Soarnol House in the period.
Dividends of £4.8 million were paid during the year, with a final dividend of £3.4 million proposed.
- All financial figures converted from Euros using the latest Morningstar exchange rates.
