API disappointed with figures for the half to March, though initiatives put in place have positioned the group for growth and a stronger second half looks likely.

Over the past 18 months, API has exited from loss-making business and is now a pure foils and laminates play, making specialised packaging and security products for the tobacco, food and drink and consumer goods sectors.

Interim sales were £51.1m (£52.4m), with operating profits from continuing operations of £1.3m surrendering to losses of £500,000. Deterioration at the operating line was caused by a poor turn from laminates, which moved into the red on a 22% drop in sales caused by flagging demand in a soft market. In contrast foils did well, scoring a 12% sales increase and a 13% uplift in operating profits, thanks to upbeat performances in the US, China. In terms of sectors, the holographic market was strong for foils.

‘Foils historically is where the problems were’, remarked frustrated chief executive David Walton, ‘but we are now in the middle of a great year. But progress in foils has all been offset by a big deterioration in laminates’.

Investors taking a long-term view of API should consider recent capital investment and business development initiatives, including upgrading the foils product range, broadening foils distribution in Europe, as well as the current relocation and expansion of foils manufacturing in China and the modernisation of API’s manufacturing skill set in the US.

For now, Numis Securities has downgraded its forecasts for both this year and next as well as its target price and urges investors to sell. With the outlook for the rest of the year looking mixed, we agree.