18th Apr 2016 06:59
LONDON (Alliance News) - Home safety products supplier Sprue Aegis PLC on Monday downgraded its expectations for 2015 after it decided to increase its warranty provision following an issue with batteries from a third-party supplier.
Sprue Aegis said it has recently identified an issue in certain batteries from a third-party supplier which may cause a premature low-battery warning in some of Sprue's smoke alarm models sold in the UK and Europe.
Due to this, Sprue Aegis has increased its 2015 warranty provision to GBP6.8 million, compared to GBP900,000 a year earlier, a GBP5.5 million hike from the previous provision made for 2015.
The knock-on impact of this will be Sprue's operating profit for the full year will be around GBP7.3 million, compared to GBP12.1 million previously.
"I am deeply disappointed about the impact this third party component issue is having and I wish to reassure customers and all stakeholders that the company takes the quality of all of its products very seriously," said Executive Chairman Graham Whitworth.
But Sprue also said its results for 2016 are set to take a hit from another source, with challenging conditions in France, driven by overstocking, and weaker sales in Germany, from product certification delays, to hit results for 2016.
The group expects operating profit for 2016 to be around GBP1.9 million.
"Unfortunately, overstocking in France and weaker sales into Germany, have resulted in us issuing revised guidance for this year. We expect to rebuild trading momentum in the second half of 2016 with certified new products and enter 2017 with normal levels of trading," Whitworth added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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