Somerset advanced manufacturer warns profits will be hit by fall in global demand

Gooch & Housego has warned that its profits for the year will be £3m lower than expected.

The advanced manufacturer, which has its head office in Somerset, said fall in demand across the globe meant that profit growth will be lower than expected.

However, the company said its order book increased to £128.5m in the first six months of the year.

The company issued a trading statement which said the rise in revenues was a result of orders from medical and defence businesses.

The company which makes advanced optical instruments added that it had secured an important new customer in the sub-sea data communications market.

Gooch & Housego said it had made further progress in implementing operational improvements in its production facilities.

The company said it is delivering on our strategy of transferring additional product lines lower cost contract manufacturing partners.

Some customers in the industrial and medical laser markets have been reducing their inventory holdings and reporting near term demand weakness from some end markets.

This period of inventory adjustment is proving to be deeper and more prolonged than previously anticipated.

Some semiconductor market customers have reduced near-term demand but still expect strong growth in the medium term.

The also received customer notification that certain US programmes will no longer go ahead or have been deferred.

Chief executive Charlie Peppiatt said: “Whilst we are pleased with the order book growth, reduction in lead times and strategic progress, the group’s performance is likely to be impacted in the near term by market dynamics.

“Nonetheless, we remain focused on executing on our strategic objectives and our improved customer service has been recognised with important new orders from both existing and new customers.

“Our review of the group’s product portfolio is nearing completion. This will be an important contributor in improving the profitability of the group, especially in our A&D business.

“G&H is well positioned in structural growth markets and is executing on its strategic plan that will deliver sustainable margin growth for the group.”