Smoke alarm business sounds profit warning
Home safety products supplier FireAngel has warned investors it now expects its 2019 losses to be twice as big as previously suggested.
The Coventry-based company now expects underlying operating losses to be between £2.6m-£2.9m. It had forecast this annual loss to be £1m-£1.5m just 11 weeks ago.
There will also be an impact of about £0.9m on its bottom line from what it has previously described as “a more prudent amortisation approach”.
Annual revenues are expected to be £44.5m-£45m but FireAngel said expected sales growth in 2019 of approximately 20% has stressed the company’s processes from production right through to customer fulfilment.
FireAngel’s chairman John Conoley, who took on an executive role after the departure of chief executive Neil Smith in July, said: “While 2019 will see a fantastic sales performance, the company is not yet efficient enough to benefit from that growth.
“It is disappointing for everyone to have missed the profitability target after so much hard work. It is time now to generate a return on our research & development investment.”
The profit warning is the latest piece of bad news for investors in the business, which used to be known as Sprue Aegis.
Four years ago its shares traded above 350p but had fallen below 20p earlier this year. A summer recovery followed, up to nearly 50p, before another slump saw its shares close at an all-time low on Friday of 12p.
FireAngel’s profitability has also been affected by a change in its sales mix in the final quarter of 2019 is expected to be significantly different to that previously anticipated. Lower revenue from European and trade sales being only partially mitigated by lower margin business in the company’s retail and fire and rescue services business units.
Conoley added: “We are strongly focussed on gross margin, EBITDA and operational cash generation in 2020 and beyond, and our current experiences with connected technology field trials underpin our optimism for future profitable growth.”
