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Thu February 20 2020

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Polypipe shuts down Dubai manufacturing

20 Mar 18 Polypipe, manufacturer of plastic drainage products, has shut down its manufacturing operation in Dubai because of a trade embargo with neighbouring Qatar.

Polypipe in the Gulf
Polypipe in the Gulf

All the factory equipment is being shipped from Dubai back to the UK plant in Horncastle, where Polystorm is manufactured for the UK market. This will enable Polypipe to reduce reliance on subcontractors in the UK, the company said.

The introduction of a trade embargo was introduced between Qatar and many of the Gulf states in June 2017 following political disagreements prompted Polypipe initially to suspend manufacturing in Dubai. As 60% of production from there went to Qatar, it was no longer viable. As the situation has gone on, Polypie has chosen to cut and run rather than wait any longer for a return to normal trading relations.

“Whilst the Middle East still represents a significant opportunity for the group, we have decided to pursue an alternative manufacturing strategy in the region through use of subcontractors and to close permanently our Dubai manufacturing facility,” said chief executive Martin Payne today.

Polypipe already took a £900,000 hit on the Dubai plant in its 2017 interim results. A further non-underlying charge of £3.1m has now been taken, making £4m in the full year accounts. This covers machinery relocation costs, redundancies, lease costs and asset impairments.

Excluding Polypipe France, which is being sold and is thus treated as a discontinued operation, Polypipe’s annual results for the year ended 31 December 2017 show pre-tax profit up 4% to £55.6m (2016 restated: £53.5m) on revenue up more than 6% to £411.7m (2016: £387.2m).

Mr Payne said: "Polypipe's balanced business model, underpinned by the long-term growth drivers of legacy material substitution and continuing legislative tailwinds, has helped produce another record performance in 2017. Against the backdrop of a mixed UK construction market performance, continued political and economic uncertainty, and challenges in some overseas markets, Polypipe has delivered strong results in line with our expectations by focusing on its core strategic growth drivers. UK construction market performance is likely to remain mixed, but with continued focus on our customers and a balanced exposure to the different sectors within construction, we look forward to another year of progression in 2018."

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