12th Feb 2020 08:21
(Alliance News) - Adhesive products manufacturer Scapa Group PLC on Wednesday warned its annual trading profit will be below market expectations, tumbling more than 20% from the prior year's levels.
Shares in the company slid 34% to 180.00 pence each in early trade on Wednesday morning.
Revenue for the year ending March 31 is expected to be broadly in line with market expectations at GBP306 million, though this would represent a 1.9% decline from GBP311.8 million.
Trading profit will come in at GBP28 million, "significantly below consensus", Scapa cautioned, and 27% lower than the GBP38.2 million from the year prior.
Promisingly for Scapa however, Healthcare unit revenue will be "slightly ahead of market expectations", at GBP139 million, and will grow year-on-year despite the loss of a contract with medical devices maker ConvaTec Group PLC.
In its interim report, Scapa said it parted with GBP9.2 million in legal costs, severance fees, inventory write-offs and asset impairments, related to the loss of the ConvaTec deal.
In June, Scapa said it was seeking legal counsel after receiving notice from a ConvaTec unit, of the early termination of a supply agreement between the companies. Scapa in July added that it was eyeing USD83.8 million in damages.
Industrial revenue meanwhile will come in an at GBP168 million, edging below market forecasts, Scapa warned.
"This is primarily the result of adverse macroeconomic conditions, particularly in the automotive and specialty products markets," the company explained.
Scapa expects to report its full-year results on May 19.
Scapa added: "We believe that we have the right vision and strategy to capitalize on the outlook and opportunities for Healthcare and Industrial. Our Healthcare franchise is well positioned to benefit from the changes in the medical device market and whilst we expect the macro-environment to remain challenging, we will focus on cost reductions to drive the margin in Industrial to historical levels."
By Eric Cunha; [email protected]
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Related Shares:
SCPA.LConvaTec