BRADFORD ON AVON, England (May 19)—Avon Rubber P.L.C. will close its Proflex hose plant in Calaf, Spain, later this year to help bring capacity more in line with market demand patterns and enable it to focus on lower-cost operations.
Avon said it would take an exceptional charge of about $11 million this year for this and other reorganizations. The group is expecting estimated annual savings from the restructuring of about $5.5 million, starting during the second half of 2005.
Avon earlier had warned it was planning to close one of its six European hose factories. At the same time, the firm is planning to set up a hose operation in Turkey. Avon still will have hose facilities in Spain, France (two plants), Czech Republic and Portugal. The company said it likely will transfer the Proflex capacity to the plants in Czech Republic and Portugal as well as to the Flexo operation in Barcelona.
For the six months ended March 31, operating profits dropped 44.6 percent to $5.7 million while sales fell 7.3 percent to $209.8 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 CEO Steve Willcox, adding that energy costs, however, are "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 partially is being offset by increased sales to the "new domestic" brands and higher sales of water hose in all markets.