William Sinclair confirms poor peat harvest

William Sinclair's trading update on 2 August blames "exceptionally unfavourable weather" for continued suppression of consumer activity and poor peat harvesting operations in Cumbria and Scotland.

See Peat price increase predicted - HW 27 July.

The company achieved no conventional peat harvest during July. To help manage marginal shortfalls in conventional harvesting caused by poor weather William Sinclair has developed artificial peat drying technologies. But demands placed on it have exceeded its capacity.

A company statement said:

"Following successive failures of conventional harvests and in light of recent refinements to the technology which have reduced the unit cost of production, William Sinclair will now substantially increase its drying capacity by commissioning further drying machines.

"This extra capacity will come on stream in November this year. Under the agreement with Natural England, these machines cannot be located at their most efficient location at Bolton Fell (in Cumbria) and will instead be sited at other peat bogs owned by the company."

The company announced on 20 July 2012 that it had bought a new site at Ellesmere Port for the production of SuperFyba peat-free compost. A second SuperFyba processing line will be commissioned at Ellesmere Port and will comprise a full cleaning line together with two new extruding machines rather than only one.

This will double annual SuperFyba production capacity from the previously reported 150,000 m3 per annum to around 300,000 m3 per annum. This additional capacity will come on stream in December 2012.

Sinclair added:

"The combination of increased SuperFyba production and peat drying will ensure the Company can fulfil its obligations to its customer base over the long term. However because of the time required to establish this production the company will be forced in the very short term to scale back bagging operations and to buy in some peat from third party suppliers at a substantial price premium.

"The inefficiency associated with volume changes and the higher material costs will mean that even with an assumption of normal weather patterns for August and September the company will not now meet the market’s profit expectations for this financial year. While selling prices across the industry are likely to go up, the company will still feel some effect from the shortage of raw materials during the next financial year."

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