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05 May 2020 | 15:43

600 Group slashes costs amid Covid-related market challenges

(Sharecast News) - Industrial engineering company 600 Group updated the market on its trading in light of the Covid-19 coronavirus pandemic on Tuesday. The AIM-traded firm had said that trading conditions in February were more challenging, with volatile order intake in both its machine tools and industrial laser systems divisions, including a number of projects being delayed until the next financial year.

On Tuesday it said the evolving international response to the pandemic, including government restrictions on working and movement, were impacting the company.

It said steps had been taken to protect all employees at its operating sites, in line with relevant regulatory guidance, while deliveries during March across all regions in which it operates were negatively affected.

The ongoing restrictions also continued to create supply challenges, particularly in the general engineering sectors.

Trading results for the year ended 28 March were expected to be "broadly in line" with the board's previously revised expectations, it said.

However, given the "unprecedented uncertainty" around the impact of Covid-19, the directors said they were unable to provide any guidance for the current financial year to 31 March 2021, until they receive more clarity.

To help mitigate the impact of the pandemic, 600 Group said it was taking advantage of government schemes and stimulus packages, including loans under the US government's Paycheck Protection Program, and had taken action to reduce overheads wherever possible.

The firm said it had adopted short time working, furloughed staff, and adopted temporary salary reduction schemes for many employees across the firm, including, with effect from 1 March, the board and senior executives.

It had also deferred all non-critical capital expenditure.

Following the de-risking of the group with the receipt of surplus from the successful pension scheme buy-out in 2019, and the sale of the Gamet business and property in the year ended 28 March 2020, the board said debt levels remained in line with those at the previous year-end, with the group remaining covenant compliant and with "adequate" banking facilities.

"Despite the short-term end-market weaknesses and macroeconomic uncertainty, the board continues to believe in the long-term fundamentals of the group," said executive chairman Paul Dupee.

"The board has taken decisive action to reduce costs and to keep the workforce and technical competencies together to ensure the group is well placed to reap the immediate benefits when the markets return to normality."

At 1227 BST, shares in 600 Group were up 1.14% at 8.85p.
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