28th Nov 2019 14:25
(Alliance News) - Vitec Group PLC said Thursday its financial performance in 2019 will likely be hurt by retail de-stocking and a slower-than-expected trading recovery following a fire in April 2018.
Vitec shares were down 12% in London at 1,000.00 pence each on Thursday.
Vitec provides wireless video products and imaging solutions to broadcasters, content creators and photographers. It said it expects adjusted profit before tax for 2019 to be in the range of GBP47 million - GBP50 million, compared to GBP51.2 million in 2018.
The company said retail de-stocking in 2019 has been more severe than expected and is estimated to have an around GBP6.0 million impact on operating profit.
Also, following a fire in the SmallHD premises in April 2018, the business continues to experience delays in launching new products. As a result, SmallHD operating profit is expected to be around GBP5.0 million lower than in 2019. SmallHD is part of Vitec's Creative Solutions division.
Vitec said its Imaging Solutions division is adapting successfully to an e-commerce business model, while market conditions in Production Solutions remains stable and division has started to prepare for the 2020 Summer Olympics.
Although its order visibility is limited, the company expects to deliver progress in 2020.
The company said its financial position remains strong and it expects year end 2019 net debt to be broadly flat year-on-year. It said the insurance claim for the SmallHD fire has been settled. Cash conversion is expected to be satisfactory, albeit lower than in 2018.
Stephen Bird, chief executive officer, said: "We continue to make good strategic progress and expect 2020 to be a year of progress to the group, benefiting from the Summer Olympics, US presidential elections and the targeted growth initiatives already underway."
"Our 2020 financial performance, however, will be affected by the continued impact from the fire at SmallHD, and specifically its effect on the timing of the launch of new products," Bird said.
By Loreta Juodagalvyte; [email protected]
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