Shares in RM2 International (RM2), a would-be producer of revolutionary pallets, fell a further 5 per cent after the group announced pre-tax losses had increased by 14 per cent to $25.4m (£16.7m) during the first half. The cost of sales doubled to $17.2m, as the group underproduced pallets. Management had already announced revenue and pallet production for the full year would be significantly below previous guidance. That's because customer feedback revealed the need to change to a gel-based pallet coating system from a powder base. Management also announced its intention to raise £30m via a share placing.
Management says the gel coating addresses customers' health, hygiene and safety needs better and increases durability over the life cycle of the pallet. The switch to this new system means the substantial upswing in production, which management had been predicting to begin in the third quarter and accelerate into the fourth quarter this year, will not be achieved.
