Avon confirms closure of Proflex hose unit in Spain

By Liz White, ERJ staff

Bradford on Avon, UK-Avon Rubber plc has confirmed that it is to close a hose plant in Spain, following a major review of the group's European automotive hose making business. The Proflex facility at Calaf, Spain, will be shut, to “bring our capacity more into line with market demand patterns and enable us to focus on our lower cost operations,” said the group, in its interim results statement.

Avon will take an exceptional charge for this and other reorganisations of about £6.0 million this year. The group is expecting estimated annual savings from the restructuring of about £3.0 million, starting during the second half of 2005.

Meanwhile the group's turnover of £114 million for the half year ending 31 March 2005 was down from £123 million for the same period last year, while operating profit also dropped, to £3.1 million from £5.6 million.

“Availability and pricing of raw materials has improved from the exceptionally difficult pattern experienced during recent months but remains the focus of our attention," said Avon's chief executive Steve Willcox, adding that energy costs are, however, “increasing as we enter new contract periods.”

Willcox pointed to a softening in automotive markets overall and said weaker volumes of larger vehicles from traditional North American manufacturers is being partially offset by increased sales to the “new domestic” brands and higher sales of water hose in all markets. Avon expects the completion of its planned automotive division restructuring to have a positive impact in the second half.