(June 13, 2009)
Raymarine responds to difficult trading conditions By IBI Magazine
Raymarine issued a statement on Friday saying it was exploring an equity fundraising or outright sale of the business. The marine electronics manufacturer said it is operating close to the limit of its current bank facilities, partly due to fluctuating currency exchange rates.
The company said in the statement that global sales in May were "broadly in line" with its expectations. "In the US, sales have remained at depressed levels as both OEMs and retail channels continue to de-stock," said the statement. "In the UK and Rest of World sales were slightly weaker than expected. Many OEMs are now shut for an extended summer break with indications that they plan to restart production again in the Autumn."
Raymarine said that future sales could be impacted by OEM downsizing or bankruptcy proceedings. "Subject to any such impact, the Board is expecting that destocking will come to an end in 2010 and this, together with the anticipated recommencement of production at OEMs, should support sales next year," said the statement.
Raymarine has introduced cost-cutting initiatives that have reduced operating costs, and has consolidated its UK operations onto one site. Raymarine said in April that it expects to report a pretax loss for 2009.
The statement noted that Raymarine's banking group may consider providing additional short-term funds while the medium-term funding options were investigated.
Panmure Gordon & Co analyst Oliver Wynne-James told Reuters that most buyers would baulk at paying the company's current net debt value. For the full year ended Dec. 31, Raymarine's net debt was 93.5 million pounds, after 19.7 million pounds of foreign exchange movement. Wynne-James said competitors Navico or Garmin could be seen as potential buyers. But he added that those electronics manufacturers are "busy enough with their own marine electronic assets."
Brokerage firm Seymour Pierce also mentioned Garmin and Navico as potential buyers, but also questioned their ability to step in at this point. "We believe that Raymarine is, despite recent failings, a good business with a well regarded global brand. Because of this the equity fundraising has some potential but we would expect it to come at a discount with strings attached," said the firm in a statement. Seymour Pierce maintained a "sell" rating on the stock.
Raymarine shares closed down 14 per cent at 17 pence on the London Stock Exchange on Friday, and at presstime on Monday, had declined another 11 per cent to 15.25 pence.