Fenner issues profit warning as US coal industry weakens - UPDATE

30th May 2014 07:05

Polymer products maker Fenner has warned that underlying group profit before tax for the current fiscal year could be reduced by as much as 10-15% below the current consensus market expectation of £77.6m. This was partly due to what are expected to be "significantly weaker" than previously anticipated results from its ECS business in the US for the remainder of the financial year ending August 31st. The group previously predicted an improvement towards the year-end. It explained both trading conditions and sentiment in the US coal industry had deteriorated and are showing no prospects for imminent improvement.That was on top of ECS's failure in a competitive tender for the supply of conveyor belt to an iron ore miner in western Australia, which it had previously expected to manufacture and deliver during the final quarter of the financial year. It was keen to stress both that trading conditions in Australia generally continued to improve and that the performance and outlook for AEP for the remainder of the financial year and beyond was "unchanged and remains encouraging".Broker finnCap said the conveyor belt deal would have made a "significant fourth quarter impact to profits". Based on the numbers provided by Fenner, finnCap reduced its previous full-year forecast of £80m to £67m, saying it was "likely to reduce our 2015 forecast by around £9m". "The shares are likely to react badly in the short term to this disappointing result and we temporarily move our forecast and rating to being under review," it added. The stock sank as much as 15% to 331.45p in early trading on Friday.NR