7th Oct 2014 07:00
LONDON (Alliance News) - Latchways PLC Tuesday warned that its full-year earnings will be materially below last year's levels after the weak trading it had highlighted back in August continued, and it said it has taken steps to limit spending except on sales resources and new product development as a result.
However, it said it will maintain its dividend in the expectation that profitable growth will resume in its next financial year.
In a trading update, the maker of protection systems for working at height said it now expects its pretax profit for the year to March 31, 2015 to be between GBP4.5 million and GBP5.5 million.
It said European market conditions have remained challenging, with customers delaying capital projects due to the poor economic outlook, and it has seen delays in the European offshore wind energy business due to uncertainties over feed-in tariffs and connection to the grid.
"These issues are now largely resolved, and we are seeing increased activity on wind farm projects, but these are at too early a stage to avoid the delays impacting this year's revenues," Latchways said.
It has also experienced problems in North America. It said it has made progress on expanding its customer base in the region, but de-stocking by one of its largest customers has "substantially curtailed revenues" in the short-term. This included the cancellation of around GBP1.5 million of orders placed for its Self Retracting Lifeline products that the company expected to deliver in the first half of the financial year.
"Although we are disappointed with the rate at which these products have been rolled out, we are confident that the appropriate resources are now in place to accelerate product sales going forward," it said.
On a positive note, Latchways said the upturn in itsr UK Horizontal business has been maintained throughout the summer, with customers reporting increased activity throughout the construction market. It also said it has continued to make progress in Latin America, and it is seeing an improving outlook for its Vertical systems, with several "significant" prospects in the pipeline for 2015/16.
Cash balances at the end of September were in excess of GBP10 million, it said.
"Given the temporary nature of the current challenges, we expect to maintain our dividend for the current year with the expectation of resuming profitable revenue growth next year," Latchways added.
It will put out its interim results for the six months to September 30 on November 17.
By Steve McGrath; [email protected]; @stevemcgrath1
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