26th Sep 2014 07:28
LONDON (Alliance News) - Andrew Sykes Group PLC Friday said its pretax profit fell in the first half of the year as its hire and sales business struggled in both the UK and Europe, although it expressed cautious optimism for a "satisfactory performance" in the remainder of 2014 despite seeing disappointing trading in the third quarter so far.
Andrew Sykes posted a pretax profit of GBP4.1 million for the six months to June 30, down from GBP6.7 million a year earlier, as revenue declined to GBP26.8 million from GBP29.7 million. Additionally, net finance costs rose due to an inter company foreign exchange loss caused by the strength of sterling.
Still, the heating and air conditioning company proposed a sweetened interim dividend of 11.90 pence, up from 8.90 pence in the previous year.
The company said its main hire and sales business in the UK and Europe had been hampered by a number of challenges during the half year. In the UK and the Netherlands the company's heating business was "severely affected" by an unseasonably mild winter, and in the Netherlands this was compounded by the decline of the construction sector.
This more than offset higher demand for air condition products that came with warm weather in the early summer, and wet weather raising demand for its pump hire business.
Its performance in Belgium and Italy was also damped by the mild weather, although to a lesser extent, and its new businesses in France, Switzerland and Luxembourg continues to trade in line with expectations.
Price competition hit its UK air conditioning installation business, leading it to produce a lower operating profit.
In the Middle East its Khansaheb Sykes business got off to a slow start as contracts were delayed, although it saw improvements in June in Dubai and Abu Dhabi, which helped the unit post a higher operating profit compared to a year before.
The company warned that trading in its third quarter to date has been "disappointing" as warmer weather in the UK and Europe was not sustained and did not reach the peaks of 2013. Additionally, activity in the Middle East was quiet in July as a result of Ramadan, and the expected upturn in the last five months of the year has "so far failed to materialise."
Andrew Sykes said that weather in the final quarter of 2014 may "significantly affect" the outcome for the full year.
Shares in Andrew Sykes were trading down 31% at 262.00 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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