Tech manufacturer reports revenue drop amid delayed orders
Solid State, the manufacturer of computing, power, and communications products, has seen revenues drop amid “challenging trading conditions” and widespread customer de-stocking.
In its interim results for the six months to September 30, Solid State recorded revenues of £61.8m and adjusted profits before tax of £2.5m, marking declines of 29.9% and 65.7% respectively from the same period last year.
Solid State was told that expenditure on the programme has been paused, which is believed to be in connection with the completion of the UK Government’s strategic defence review next summer.
A major factor for Solid State’s interim results was the absence of anticipated “communications programme revenues,” which had gone into the previous financial year, alongside a currency-related revenue headwind of approximately £700k. The accelerated delivery of a £10m order in the prior year alone accounted for a significant shortfall in the current period’s results.
Bosses are seeing “tentative signs” of improvement in the industry, which is reflected in order intake in recent weeks. The order book, valued at £85.5m at the end of November, has seen improving demand, particularly in the electronics sector.
Headquartered in Redditch, Solid State employs more than 400 people around the world. The business has seven production facilities in the UK and two in the USA. In total, including all office locations, the group operates from 15 national and international sites.
Nigel Rogers, Chairman of Solid State, said: “These results reflect difficult trading conditions in the first half of the year due to a combination of factors, mostly cyclical in nature but some unforeseen. Management have taken steps to mitigate their effect, and the Board is confident that ongoing investment in facilities and people will build a strong platform for strategic growth.
“Leading indicators, including the rate of design activity, suggests that the electronics market appears to have reached the bottom of the cycle, and this is reinforced by the improvement in order books since the period end. The delay in revenues from the most recent tranche of Communications products was unexpected, and there are good grounds to be optimistic that these programmes will be resumed after due process.
“The Directors are confident of a return to a growth trajectory, whilst taking a cautious approach to short term earnings guidance and dividend policy to recognise some uncertainty on timing.”
