29th Oct 2018 09:13
LONDON (Alliance News) - Gama Aviation PLC on Monday lowered its full-year expectations after trading in some of its divisions has not improved "sufficiently" during the second half of 2018.
The stock was down 18% on Monday at 125.00 pence per share.
The aviation service provider said it now expects the annual underlying operating profit to be USD3 million below its original expectations. In 2017, Gama generated underlying operating profit of USD18.7 million.
On a divisional basis, the company's Air unit saw stable performance in Europe, Middle East & Asia. However, profit from the US is now below Gama's expectations due to slower-than-anticipated growth in charter and aircraft management revenue.
Meanwhile, the Ground division in Europe has successfully completed its transition of operations from Farnborough and Oxford airports to Gama's new facility at Bournemouth international airport.
The US ground division continued to deliver strong organic growth and solid productivity,Gama said. However, growth in maintenance revenue has not been at the level required to achieve the company's expectations, partly as a result of delays in new capacity coming on stream.
In Asia, Gama's associate China Air Services Ltd has continued to underperform with the unexpected loss of contracts significantly harming margins.
More positively, the Middle East Ground division is performing well in the context of a challenging regional market.
"The reduction in our expectations for this year is disappointing with the growth that we had anticipated not coming through as strongly as expected," said Gama Chief Executive Marwan Khalek.
"Nonetheless, we are still expecting healthy growth for the year whilst continuing to make good progress in building capability and capacity and securing encouraging new business in all of our key markets. The fundamentals of our business remain strong," added Khalek.
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