Driver Group slides as Middle East exerts drag on revenues

4th Jun 2019 09:09

(Sharecast News) - Driver Group's shares slid on Tuesday after the company reported a dip in interim profits on the back of declining profitability in the Middle East and Asia-Pacific regions.The engineering services outfit reported a profit before tax of £1.0m for the six months ended 31 March, a 42% drop compared to the same period last year, as revenue came in 6% lower at £29.7m.Middle Eastern revenues dropped by 14% to £10.3m as a number of significant commissions reached completion in Kuwait, while Asia-Pacific revenues fell by 17% to £4.5m following delays in new commissions from Singapore.This more than offset the 4% revenue growth seen in the Europe & Americas region as the Driver Trett UK business continued its strong performance from the prior financial year and mainland Europe enjoyed revenue growth from £0.7m to £3.6m, resulting in an increase in profits from £0.1m to £0.5m.The AIM traded company's cash and cash equivalents stood at £7.4m at the end of the period, up from £5.8m at the same point 12 months earlier, and its interim dividend was upgraded from nil to 0.5p per share.Steve Norris, chairman of Driver, said: "Although the first half of 2019 has seen lower activity than expected in some markets we have reacted quickly to re-align the cost base of underperforming businesses in the first half and with enquiry rates at high levels the group is well placed to record good progress for the remainder of the current financial year."A statement from Driver added that, with enquiry rates at high levels, the group is well placed to record good progress for the remainder of the current financial year, though fourth quarter activity levels will be "critical" to the outcome for the year as a whole.The company continues to expect a full-year underlying profit before taxation broadly in line with the guidance set out in its March trading update, which in turn was slightly below the 2017/18 result at approximately £3.5m.Driver Group's shares were down 16.51% at 50.51p at 0824 BST.