27th Oct 2015 08:31
LONDON (Alliance News) - LED technology company Dialight PLC on Tuesday outlined the result of its recently-undertaken strategic review, with a range of targets set out to 2018, as its current trading continued to suffer from a downturn in orders from the oil and gas sector.
Back in June, Dialight issued a profit warning due to a slowdown in orders in its lighting business in both the US and Europe which meant its revenue this year would be below previous hopes. At its interim results in July, the group reported a decline in pretax profit, and it scrapped its dividend as it warned on the uncertainty of orders emerging and potential delays into the second half.
The profit warning prompted the group to kick-off a strategic review of the business and on Tuesday Dialight said this will result in it focusing activities on its lighting and obstruction businesses. Its traffic and vehicle businesses, currently in its Signals unit, will now be managed for value and will be reported separately in the company's full-year results.
Dialight said it will focus on delivering profitable growth and said it will not pay a dividend for the full year. It will re-evaluate its dividend policy in due course, but at present does not expect to pay a dividend before 2017.
The company also set out its targets for 2018, by which time it wants to deliver overall revenue growth of 25%, a gross margin in excess of 40%, an earnings before interest and tax margin of more than 15%, and a cash conversion ratio of over 80%.
In the third quarter of this year, however, the troubles facing Dialight continued, as further weakness in the oil and gas sector translated into weaker orders, particularly in North America. As a result, lighting revenue growth in the quarter was just 5.0%. This compares to 24% growth in the first half.
Given the continued challenges in its markets, Dialight said the fourth quarter looks uncertain, having traditionally been the strongest period for the business.
Shares in Dialight were down 18% to 549.00 pence on Tuesday, one of the worst performers in the FTSE All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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