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. This is the situation that we think Molins finds itself today, after Q4 trading was said to have been “materially” affected by delayed orders and lower gross margins, due to extended customer procurement cycles and “unfavourable sales mix”. Here, we suspect that some of the deferrals might have also been triggered by macro uncertainties, such as the November US Presidential elections. That said, as the ‘economic fog’ lifts, client capex budgets are returning to normal, generating much improved activity levels, particularly in Packaging Machinery (PM). In fact, so much so that the Board now expects to close 2016 with a “significantly higher” backlog than enjoyed 12 months ago (~£25m 1st Jan’16).
