19th Jul 2016 07:54
LONDON (Alliance News) - Energy efficiency products and services company Entu (UK) PLC on Tuesday issued a profit warning, saying that it has had to absorb higher costs from a now-shut division and that commercial work has proved slow to materialise.
Entu said pretax profit in the financial half year to the end of April was down to GBP1.0 million from GBP4.2 million a year earlier, primarily as a result of extra administrative expenses related to the closure of the company's solar division the year before.
Entu said that, despite actions taken to cut costs, overheads formerly charged to its solar business have been carried into the current financial year, and Entu said this will result in its results for the year to the end of October missing market expectations.
Shares in Entu were down 21% to 42.90 pence early Tuesday, among the worst performers in the AIM All-Share, following the news.
Revenue grew to GBP51.2 million from GBP45.8 million in the year, but Entu said new commercial business has been slow to come through, exacerbating the effect of the extra, solar-related overheads. The company's home improvements business performed well in the half.
The company slashed its interim dividend to 0.5p from 2.67p the year prior.
"We made the right decision in exiting the solar business last year after the government reduced feed-in-tariffs, but managing the exit took more management time and cost than we had hoped. This affected results in the first quarter, but we recovered with our strongest ever sales performance in second quarter," said Chief Executive Ian Blackhurst.
"We have also refocussed our strategy, restructured our business and reorganised our senior team. There is still work to do, and the long-term impact of Brexit is as yet unknown, but focus in the second half will be on improving returns in the core home improvements business and continuing to drive efficiencies to position the business for growth in 2017," Blackhurst added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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