AIM-listed engineering firm hit by unfavourable sales mix and delivery delays
Companies: Mpac Group PLC
International engineering company Molins Plc issued a profit warning on Monday, saying it expects figures for the final quarter to be materially lower than expected and as a result has cut its full-year guidance.
The AIM-listed firm's performance was negatively impacted by an unfavourable sales mix and a number of delays to key deliveries, but the company said order intake in the quarter had increased 80% Yoy, resulting in a big boost for 2017:
"...the Packaging Machinery businesses in particular benefiting from a strong period of conversion of prospects. The consequence of this recent order activity is that the Group is expected to enter 2017 with a significantly higher order book than it had entering 2016."
The company has been conducting a strategic review to improve processes and enable the group to better serve customers, with the outcome due early next year.
Broker Panmure Gordon said materially weaker trading had been a result of unfavourable sales mix and a number of deliveries delayed into 2017. As a result, Panmure cut its 2016 PBT forecasts by around 50% to £0.7m, but left its 2017 forecasts unchanged:
"... order intake in the last three months grew by 80% over the same period last year, with the Packaging Machinery businesses in particular benefiting from a strong period of conversion of prospects. Consequently, the company is expected to enter 2017 with a significantly higher order book than it had at the beginning of 2016."
Whilst Arden Partners analyst Paul Hill said:
"Profit warnings are never pleasant, albeit some are far less painful than others. You see that, when caused by transitory, rather than permanent factors, the damage tends to be milder and more short-lived."
Molins Plc shares fell c.10% in early trading, taking the firm to a 6-year low.
