Shares plunge 30% after manufacturer’s profit warning
SHARES in 600 Group fell 31% after the manufacturer issued a profit warning and complained of poor visibility of future sales.
The AIM-listed company’s share price dropped from 12.9p to 9.1p within the first 10 minutes of trading, before stabilising and closing at 9.0p.
It is the lowest closing price since September 2012.
The Heckmondwike-based group, which sells machine tools and precision engineered components, has launched a £1m cost-saving drive in response to a slowdown in demand from America.
In a statement to the stock market, it said the group’s results are now expected to be below current market estimates.
600 Group also warned of poor visibility of its performance, which is “difficult to predict and subject to monthly fluctuations”, because its customers are leaving purchasing decisions until as late as possible which is resulting in its order books overall being at a little over one month.
The Heckmondwike-based group said: “Both of our divisions have taken steps to reduce overheads and improve factory efficiencies from which we will see annual saving of approximately £1m going forward.
“In addition, the benefits from the integration of the TYKMA and Electrox laser businesses are now producing improved margins.
“The sales and marketing initiatives in both divisions are gradually showing signs of success despite the poor market conditions. However, these improvements and the restructuring benefits are unlikely to offset the effects of the volume decline from the market weakness in the machine tool industry.”
It also pointed to the latest Oxford Economics Global Machine Tool Outlook Survey’s figures for machine tool consumption for the year to December 2015, which showed Europe negative by 18.8% with the USA flat.
