Packaging manufacturer Robinson has revealed a restructuring program as profits for the start of 2023 sit “substantially below” those seen in the first five months of 2022. The firm says it comes despite substantial sales price increases with customers, with Robinson having been unable to cover the full inflation in costs in the period, due to a reduction in sales volume. The business has consequently implemented a restructuring program which will result in exceptional costs of £0.4m and annual savings of £0.7m, of which £0.4m will benefit 2023.

Sales in the first five months of the year were 2% below the comparative period in 2022. While after adjusting for price changes and foreign exchange, sales volumes are 11% lower, of which 4% is due to a major UK customer experiencing a supply chain issue. The company said that whilst it is unlikely to recover the lost sales in 2023, it expects to return to the normal run-rate on these products.

The Chesterfield-based firm noted that it is also seeing reduced demand due to inflation and the cost-of-living crisis.

The group however expects to deliver full year adjusted operating profit in line with current expectations and ahead of 2022.

Looking ahead, in a statement to London Stock Exchange, Robinson said: “We expect the substantial macroeconomic uncertainty and volatility experienced since the beginning of 2021 to continue throughout 2023.

“We are seeing more new business activity with our existing and potential customers, which provides opportunities for additional sales in 2023 and beyond. In particular, the previously announced new contract in Denmark requires substantial investment in the current year but will begin to benefit sales and profit from 2024. We have a portfolio of opportunities, close to completion, which if converted would comprise more than 10% of annual sales.

“Given the ongoing pressure on volumes, input prices and margins, the Board will continue to prioritise the management of costs and cashflow. 

“Despite the ongoing uncertainty, with the current restructuring programme, we expect adjusted operating profit in the 2023 financial year to be ahead of 2022 and in line with current expectations. We remain committed in the medium-term to delivering above-market profitable growth and our target of 6-8% adjusted operating margin.”

The Bank of England has increased interest rates by 0.5 percentage points to 5% – the highest level since 2008 and 13th consecutive rate rise. The bigger than predicted hike comes as inflation remains at historically high levels, with new figures for May remaining unchanged at 8.7%, after falling in April, and staying much higher than the Bank’s 2% target. Inflation had been expected to decline to 8.4% year on year, leading to a further interest rate rise from the Bank of England to bring it under control. The sharp increase will come as a blow to many businesses struggling with rising bills and the highest borrowing costs in 15 years. Commenting on the Bank of England’s decision, East Midlands Chamber Chief Executive Scott Knowles said: “After 12 consecutive rate rises by the Bank of England as of last month, we expected to see a significant and sustained fall in inflation by now if this policy was to be the main driver in tackling the issue. “So many businesses may question what impact a 13th hike in interest rates to a 15-year high will truly have, with inflation having flatlined at 8.7% in the latest figures. “It’s becoming increasingly clear this is a blunt instrument that only focuses on reducing demand among a select group of consumers. Instead, we desperately need a dedicated strategy from Government to raise productivity, which would mean we have sufficient supply of products and services to meet this demand – bringing down prices and, thus, inflation. “To drive up productivity, we need to support businesses to invest in their operations. Investment intentions among East Midlands firms for both plant and machinery, and training people, were each down by 3% quarter on quarter in the period from April to June this year, according to our Quarterly Economic Survey. “Both these trends need to be reversed if we are to raise capacity and therefore productivity, which would mean high demand can be met with sufficient supply of products and services to then bring prices, and thus inflation, down. “To this end, Government must help businesses by focusing on what we call the ‘four Is’ in our East Midlands Business Manifesto for Growth, A Centre of Trading Excellence – investment, innovation, infrastructure and international trade. “Action in these areas should involve helping with the tight labour market by incentivising firms to upskill their people and making it easier to recruit skilled workers from overseas, more financial support for research and development in key sectors, and cutting red tape that continues to hinder exports.”

The first group of successful Create Growth grant applicants has been announced – with up to £400,000 of funding now heading to the East Midlands.

Fourteen grants, each worth between £10,000 and £30,000, have been awarded to creative businesses in Leicester and Leicestershire, Derby and Derbyshire, Rutland, Lincoln and Greater Lincolnshire.

The successful applicants to the Innovate UK-funded scheme were revealed as Government announced new plans to maximise the potential of the UK creative industries and grow the economy.

Recipients of funding include fashion firms, gaming tech companies and businesses in the music, design, production and video sectors. 

The Athlete Place, based at LUinc. on the Loughborough University Science and Enterprise Park, is an online platform providing guidance and support for parents of aspiring young athletes.

Founder Joe Fuggle said: “We are thrilled to be among the first beneficiaries of Create Growth funding.

“By receiving support, we will be able to enhance the production value of our content and education through collaboration with experienced professionals in the creative industry.

“It’s a massive opportunity to explore previously out-of-reach projects and improve our investment readiness and is very exciting.”

The fourteen successful funding applicants were:

• Gumbo, Leicestershire 

• Th!nk FC, Leicestershire

• Super Hyper Instant Future Time, Derbyshire

• Future Proof Creative, Derby

• Floop Group, Lincolnshire

• Graphic Workman, Derbyshire

• Rubitek Solutions, Leicestershire

• Biomatics, Lincoln

• The Athlete Place, Leicestershire

• Lyndon Media, Leicestershire

• Cocoa Amore, Leicester

• Haarlem, Derbyshire

• Derby Swap Shop, Derby

• Apnakey, Leicester

The Creative Industries Sector Vision, published by Government last week, aims to grow the creative industries by £50 billion by 2030, create one million extra jobs, and deliver a creative careers promise that builds a pipeline of future talent.

Culture Secretary Lucy Frazer said: “This Sector Vision is about driving innovation, attracting investment, and building on the clusters of creativity across the country.”

Elsewhere, as part of the wider Create Growth agenda, the East Midlands Creative Consortium (EMC²) is recruiting to a separate programme supporting businesses operating in the creative sector.

EMC² is among the first six regions to run the scheme, which will offer bespoke development packages which increase business skills and help businesses get better prepared to capitalise on future finance options as they become available. 

It runs across Leicester and Leicestershire, Rutland, Lincoln and Greater Lincolnshire, Derby and Derbyshire, with the first cohort starting in September.

The free programme of support will ultimately work with 100 regional businesses to help them accelerate business growth, create jobs, and prepare for investment.