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By Jason Douglas
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- Umeco PLC (UMC.LN) Wednesday said orders for its composite materials are rising, after weak demand and a heavy amortization charge caused a 47% fall in fiscal first-half pretax profit.
Umeco Chief Executive Clive Snowdon told reporters demand for Umeco's composite materials have increased since the summer and it is getting orders from big commercial aircraft makers, motor sport teams and wind turbine manufacturers.
He said the company expects its composite business to return to higher rates of growth in the second half and next fiscal year.
Umeco said Wednesday pretax profit for the six months to Sept. 30 declined to GBP6.1 million from GBP11.6 million a year earlier.
Revenue rose 1.2% to GBP199.6 million, helped by the weak pound and an acquisition. Stripping those effects out, revenue was down 7.7%, Umeco said.
Earnings were weighed on by weak sales at its composite business and an GBP3.1 million amortization charge following an acquisition in December last year.
Composite revenue declined 10% during the first half. Snowdon said wind turbine makers couldn't get project financing, motor sport teams put orders off and demand for its materials from business jet makers fell following a slump in demand for the jets themselves.
The decline at the composite unit was partially offset by a 12% rise in revenue at its supply chain management business, to GBP116.4 million. The unit had a good six months thanks to the expansion of big contracts with Airbus, Boeing Co. (BA) and Rolls-Royce Group PLC (RR.LN), said Snowdon.
Umeco said it will still meet its own fiscal year earnings expectations, although didn't say what those were. Analysts expect the company to report a pretax profit of between GBP23.5 million and GBP26 million on revenue of between GBP422.6 million and GBP454.6 million, according to FactSet.
Snowdon said in the longer term Umeco expects car makers to adopt composite technology in passenger cars, potentially opening up a big new market for Umeco. The technology is currently more or less restricted to high performance sports cars, he said.
At 0902 GMT, shares in Umeco were up 7.25 pence, or 2.8%, at 265.5 pence, outperforming a 1.6% higher Dow Jones U.K. Smaller Companies index.
Company Web site: www.umeco.com
-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com
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