North Tyneside manufacturer Formica saw sales drop and losses widen as a result of market decline, new accounts show.
The laminate maker, which has its base on the Coast Road, has been manufacturing products for residential and commercial customers for more than 70 years, but recent years have seen a major restructuring at the North Shields site.
Over the last four years Formica has reduced its factory footprint and now only manufactures from the west part of the site. Despite the reduced manufacturing space, the latest accounts show the firm has continued with investments to strengthen the business for future years. The accounts say the firm also ‘rightsized’ the production staffing levels, resulting in employee numbers dropping from 320 to 282.
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The investments come as the firm, the main trading entity of Formica Holdco (海角视频) Limited, booked turnover of £44.8m in 2023, a 22% drop on the previous year’s £57.3m. Its operating losses for the period grew from £11.5m to £36.9m, while pre-tax losses similarly widened from £11.5m to £37.2m.
The results showed £1.5m in respect of restructuring costs incurred during the period, a £24.2m impairment of fixed assets, and £100,000 impairment of spare parts, all of which related to the “rationalisation of the manufacturing footprint”.
A report within the accounts says: “The Formica Group is a group of related companies operating in North America, Europe and Asia. It is a leading manufacturer of high pressure decorative laminates and the European business of which operates through various manufacturing, distribution and marketing companies, including Formica Limited.
“Formica Limited is the only manufacturer of high pressure decorative laminates in the United Kingdom and sells to major distributors and fabricators across Europe, either directly or via associated group companies.
“Formica Limited has completed a number of projects as part of a significant investment programme at its North Shields site, resulting in a reduced cost footprint. Meanwhile, the company has taken steps to strengthen its commercial margin.
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“Along with other actions such as administrative cost reductions and commercial and operational synergies with sister companies in the group, the financial run-rate of the company is improving and is expected to continue to improve both driven by the market demand as well as ongoing commercial and marketing initiatives.
“The company is continuing to focus on its North Shields facility. Whilst reducing the factory footprint we believe through modernisation and centralization we will be able to support future growth in a controlled manner and therefore benefit from an improved operating leverage.
“The North Shields site restructuring has continued during 2023 with the upgrade of the 10-tonne press finalised in Q4. As a result, the eight-tonne press is no longer in operation, and an impairment charge was raised. This was also the final manufacturing location which was still operational in the East factory and all manufacturing now takes place in the West part of the site away from neighbours and residents. The East part of the site has been earmarked for closure and demolition. This work started in 2021 with the demolition of the old boilerhouse (finalised in 2023), asbestos removal across the site and decontamination of redundant areas.”
Before the pandemic the firm was sold by its owners to Netherlands-based Broadview Holding BV as part of a deal worth more than £660m, which completed soon after the North East site had received multimillion-pound investment.