14th Jan 2020 12:16
(Alliance News) - Shares in Flowtech Fluidpower PLC sunk on Tuesday after the engineering firm warned of a full-year earnings fall after encountering tough market conditions in the fourth quarter.
Shares in the company were 17% lower at 105.00 pence each in London on Tuesday afternoon.
Flowtech said its fourth quarter organic revenue fell by 10%. Full-year revenue is expected to decline by roughly 1.5% on an organic basis, coming in at about GBP112.4 million. This would however represent a 1.2% boost from GBP111.1 million last year.
Flowtech also cautioned that market conditions are likely to remain challenging in the current financial year too.
The company said: "Expectations for 2020 have been reviewed by the board and whilst it is confident that investments made in 2019 will lead to market outperformance, current conditions are such that achieving organic growth may prove difficult, in particular in the first half. It is therefore possible that the positive impact of the cost saving initiatives which have now been formulated, and which will shortly be implemented, will be offset, at least in part, by market conditions remaining challenging.
"Notwithstanding the current difficult market conditions, the Board remains confident in delivering sustained operational improvements and significant procurement benefits."
The company added that it achieved cost-cuts of about GBP5 million, and its net debt of GBP16.6 million, as at December 31, is in line with market expectations.
Flowtech said it will issue another trading update in February.
By Eric Cunha; [email protected]
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