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15th December 2004

Trading Statement - December 2004

BBA Group Plc today issues its regular trading statement ahead of its results for the year ending 31st December 2004 which will be announced on the 23rd February 2005.

Commenting Roy McGlone, Group Chief Executive, said:

"Demand has remained strong in both our businesses during the second half of the year although, as anticipated, growth rates will be slightly lower than the first half when the group achieved total organic growth of 8 per cent. Our Materials Technology division has continued to be impacted by rising raw material costs which will affect second half profits and margins. The continuing weakness of the dollar (1) against sterling will also have some impact on the translated value of our US dollar denominated earnings during the last few months of the year.

"Despite the difficulties we have experienced in the second half, our earnings (2) (at constant currency) for the full year ending 31st December 2004 will be ahead of the prior year. Looking ahead to 2005 we are confident that we will deliver good progress (at constant currency) over 2004."

Aviation

In Business Aviation, we have continued to experience strong demand from the fractional operators. During the year we have also significantly expanded our network from 5 to 19 locations in Europe.

In Commercial Aviation, growth has continued, augmented by the recent acquisitions of AGI in the USA and Boker Aeroclean at Heathrow.

In Engine Repair, the closure of Millville in New Jersey (USA), which will produce $8 million of savings in 2005, was completed on schedule. The disruption caused by the closure is likely to contribute to higher levels of inventory at the year end. This is a timing issue only and will unwind during 2005.

Materials Technology

Demand remained strong during the second half of the year. At the end of September we acquired Tenotex in Italy, further consolidating our position in the fast growing European consumer care and wipes market.

Since the interim results, raw material costs have continued to increase with Polypropylene prices some 20 per cent (3) higher than in August and other materials such as Rayon and Polyester also affected. In response to these market conditions we have increased selling prices in a number of areas and we continue to work on improving production efficiency. However, the net impact of these cost increases is expected to reduce operating profits by approximately £5 million during the second half of the year compared to our expectations at the time of the interim results.

Outlook

In 2005 we are confident that, with the acquisitions and rationalisation projects we have completed in the current year, continuing organic growth in both our businesses and a more stable raw material cost environment, we will deliver good progress over 2004.

Notes:

  1. Average $ rates: Half Year Actual 2004 $1.81, Full Year Forecast 2004 $1.83, Half Year Actual 2003 $1.61, Full Year Actual 2003 $1.64.
  2. Profit before tax of continuing operations, excluding all exceptional items and goodwill amortisation.
  3. Polypropylene Indices Dec 03 June 04 Nov 04
    Chem Data Index (USA) cents/ lb 43.5 52.5 65.5
    Chem Data Index (USA) cents/ lb 720 830 1000

Enquiries

Roy McGlone, Group Chief Executive, BBA Group PLC, 020 7514 3999
Andrew Wood, Group Finance Director

Mike Smith, Brunswick, 020 7404 5959
Emily Kerr