Linatex is a leading brand of abrasion resistant rubber for materials handling.

£37.8 million Sales

£2.0 million Operating loss*

* before exceptionals

Demand for abrasion resistant rubber linings in heavy equipment for the global mining industry, the staple market for Linatex, fell in 2002 as investment declined, most notably in North America. Demand for Linatex products in the sand and gravel handling sector of the construction industry also fell, with the exception of China. Other industrial applications were also generally weak.

Sales reduced by 18 per cent to £37.8 million, with the exit from the equipment engineering business undertaken in 2001 contributing £4.3 million (52 per cent) of the decline. Sales in all regions declined except Australia, where the acquisition made last year of a hose manufacturer generated £0.9 million of profitable sales growth and is proving to be a strong base for innovative growth.

Operating loss before exceptionals increased from £0.9 million in 2001 to £2.0 million as a result of the volume decline. This was partially offset by fixed cost reductions mainly from labour productivity and the Six Sigma programme.

Management of the Specialty Rubber business was taken over by Greg McClatchy in July. Sales have since stabilised and action has been taken to streamline the organisation and improve focus. The closure of the service centres in Phoenix, Arizona, US and Gent, Belgium were completed and the transfer of high labour content fabrication operations from the US and Europe to Malaysia has progressed.

Commissioning of the continuous press in Malaysia, which uses leading-edge technology, has taken longer than planned due to the complexity of the project but transfer of all production grades is expected to take place shortly. No sales have been lost as a result of the delay.

Partnerships with OEM equipment producers have grown, with joint investments enabling the production of an expanded range of large moulded rubber components, a particular strength of Linatex. New product introductions have progressed with particular emphasis on grades tailored for the quality requirements of specific markets. Recently developed extruded Linatex is replacing high cost hand-fabricated components, and foamed products are also attracting attention in specialised markets.