22nd Feb 2022 11:59
(Alliance News) - Titon Holdings PLC shares tumbled on Tuesday after it results results for its current financial year will come in "significantly lower" than its prior expectations.
The Essex-based ventilation and hardware manufacturer and supplier said shortages and price increases of materials and components, and increased costs for labour and energy have hit trading in the UK and Europe.
It now predicts results for the financial year ending September 30 to be "significantly lower" than expected, as these challenges will persist until "at least" the middle of the year. This comes despite slightly higher revenue in the four months to end of January.
Titon shares were down 18% to 82.50 pence each in London near midday Tuesday.
During the financial year so far, Titon's Ventilation Systems business was held back by shortages of components, especially fan motors and heat cells, it said. The Hardware business saw stronger sales of windows and doors compared to a year before, but these were at lower margins than Ventilation sales.
Overall for Titon, net margins have been lower than expected when compared to a year before, it said.
"We will seek to apply further price increases in the current financial year to recover higher input costs, but markets remain competitive," Titon said.
The company has continued its restructuring, which has incurred costs but is expected to boost efficiency. New staff hires will cost more due to the increase in the UK National Living Wage, due in April, while Titon also has raised wages to attract new talent, amid a competitive labour market.
Titon Korea, its South Korean subsidiary, recorded less revenue than expected in the first four months of financial 2022, following delays in site construction projects. The business is expected to be loss-making for the year. US subsidiary Titon Inc is expected to incur a small loss, despite higher sales year-on-year.
"We will continue to bear down on all overhead costs in the business for the rest of the year, whilst we actively manage the market-wide supply chain and inflationary challenges," said Executive Chair Keith Ritchie.
"However, our financial position remains strong, with cash balances at the end of January amounting to GBP4.2 million and no debt."
Titon said its search for a new chief executive officer is making progress, after Mat Norris resigned in November to take up another unspecified role, leaving the board on February 9 after a tenure of only eight months.
Titon will release interim results on May 12.
By Elizabeth Winter; [email protected]
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