30 May 2018 – trading update
It is disappointing to report that the specialist engineering group has issued a profit warning ahead of its interim results to 31 March which are due to be announced on 12 June. Delays in orders in the Alternative Energy division to supply biogas equipment, partly caused by regulatory issues, will mean this division will be loss-making this financial year. Long term prospects for the business remain promising though. Similarly, in the cylinders business, delays in the start of manufacturing specialist cylinders for the MoD for use in the Dreadnought submarine programme will mean revenues and profits being deferred until next year. Despite an upturn in oil and gas markets the precision machined components business has also seen a slowdown in order intake, although this could reverse quite quickly. The result of all these issues is that results for the full year will be significantly below market expectations. The share price has fallen accordingly and we reduce our recommendation to HOLD ahead of the interim results announcement on 12 June.