31 August 2017 – trading update
The specialist engineering group has issued a disappointing trading update revealing that profits for the year to 30 September will be materially behind expectations. This is due to a poor performance from the Alternative Energy Division, where order intake has been lower than expected although the division will still report a much improved performance on the previous year. Looking ahead to next year, the company believes that the results from its manufacturing divisions will exceed market expectations but those from the Alternative Energy Division will be dependent on contracts that are still in negotiation. As such, it believes a prudent approach to 2018 is in order. Profit forecasts for the current financial year have been reduced from £1.6m to £0.2m, with those for the year to 30 September 2018 being reduced to £3.7m from £4.2m. Earnings per share in the latter year are now forecast to be 20.7p as opposed to the 23.5p expected before. Although in the short-term there may be some selling pressure on the shares we believe that long term prospects remain sound. We therefore maintain our recommendation of BUY.