23rd Jun 2016 06:40
LONDON (Alliance News) - Stadium Group PLC Thursday said it will not grow as much as expected during the current financial year after losing a "significant customer" as the supplier of wireless services warned its full year results will be fail to meet current expectations.
The company said it has received notice from a significant wireless customer in the telematics space that, following a period of reduced call-off, they will move product design in-house and manufacturing elsewhere.
"The loss of this customer will result in a delay to the company's anticipated growth and full year results for 2016 are now expected to be below market expectations. Given the seasonality within the business, in line with previous years, the board continues to expect that the company will deliver materially higher profit in the second half of the financial year," said the company.
The company's Integrated Electronic Manufacturing Services division is also seeing a faster decline in sales than the company was expecting, but Stadium Group said this is being largesly offset by cost reductions and efficiency improvements.
Elsewhere in the business, Stadium Group said the contribution from the second division, Technology Products, increased in the first half of the year, with the unit's order book up 20% since March alone.
"For the full year, higher margin Technology Products revenues are expected to contribute approximately 60% of total revenues. This, alongside the benefits of a reduced fixed cost base, following the integration and rationalisation of recent acquisitions, and ongoing efficiency savings will enable the company to deliver high single digit percentage growth in normalised profit before tax for the full year, albeit this is lower than previous expectation, and will be achieved on revenues slightly behind last year," said Stadium Group.
"In line with its previously announced strategy, the company has developed a more robust and focused operating model by establishing strategically located design centres, manufacturing centres of excellence and regional fulfilment centres, to support further growth across the company. Given the visibility and rate of growth in Stadium's forward order book, the board remains confident that in 2017 the company will return to its higher growth trajectory," the company added.
By Joshua Warner; [email protected]; @JoshAlliance
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