2nd Jul 2019 10:08
(Alliance News) - Dialight PLC said Tuesday its order intake in the second quarter has "weakened", which is expected to continue for the rest of 2019.
Shares in the LED lighting manufacturer were down 31% Tuesday morning at 341.00 pence each.
The company also said Chief Executive Officer Marty Rapp will resume his retirement after coming out of retirement in January last year to take up the role.
Rapp is set to step down on August 9, following the release of the company's interim results earlier that week. He will be replaced on an interim basis by current Chief Financial Officer Fariyal Khanbabi.
Dialight said a search for a permanent replacement is underway. Rapp will remain an adviser to the company for six months after he steps down to ensure a "smooth transition".
As a result of the poor trading, Dialight now expects its underlying profit for 2019 to be between GBP10 million to GBP13 million. The company noted the target range does not take into account an expected GBP4 non-underlying cost.
"After a very strong year in 2018, our Signals & Components business has weakened due to market uncertainty and high levels of inventory in the distribution channel," the company explained.
In 2018, underlying profit - excluding one-off costs - was GBP7.8 million.
The one-off cost stems from the company's changing manufacturing partner, Sanmina.
In a statement, Dialight said: "To facilitate our exit from Sanmina we have taken more inventory than we had previously anticipated which has impacted the group in three ways. Firstly, our current inventory levels are higher than expected. Secondly, we have incurred about GBP4 million of additional costs relating to these items in the form of markup, freight and handling charges. These costs will be treated as non-underlying. Thirdly, we expect to have a small net debt position at year end to reflect these additional inventory and non-underlying costs."
The company said it has initiated settlement discussions with Sanmina to address the underlying costs related to the transferred inventory.
Dialight maintained that it is "increasingly well positioned" for 2020.
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