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Titon profit contracts amid South Korean slowdown
12th Dec 2019 12:50
(Sharecast News) - Titon Holdings on Thursday reported a fall in annual profit on the back of weak South Korean trading, while also warning that revenue from the Far Eastern nation is expected to be even lower next year.
The ventilation systems manufacturer reported a profit before tax of £2.0m for the 12 months ended 30 September, 29% lower than the year before, as net revenue slid by 9% to £27.2m.
Titon left its dividend unchanged at 4.75p per share.
The primary driver behind the drop in revenue was South Korean turnover's 27% tumble to £8.3m, which the AIM traded company said was due to a slowdown in construction activity and a market shift towards mechanical ventilation.
Meanwhile, sales in the US grew by 51% to £1.0m and revenue from the company's UK and European based businesses rose by 1% following strong domestic mechanical ventilation system demand.
Executive chairman Keith Ritchie, said: "In South Korea, the Group's largest net profit contributor, 2019 saw growth in GDP of about 2.0%, which is also below trend. In 2020 and 2021, GDP is forecast to grow by 2.2% and 2.3% respectively as the Government continues its expansionary fiscal stance together with two interest rate cuts by the Bank of Korea.
"For Titon, it will be a year of transition for its natural ventilation products in South Korea as economic growth recovers and new products are launched. Revenue at Titon Korea in fiscal 2020 will be lower than in 2019."
Titon Holdings shares were down by 5.56% at 127.50p at 1543 GMT.
The ventilation systems manufacturer reported a profit before tax of £2.0m for the 12 months ended 30 September, 29% lower than the year before, as net revenue slid by 9% to £27.2m.
Titon left its dividend unchanged at 4.75p per share.
The primary driver behind the drop in revenue was South Korean turnover's 27% tumble to £8.3m, which the AIM traded company said was due to a slowdown in construction activity and a market shift towards mechanical ventilation.
Meanwhile, sales in the US grew by 51% to £1.0m and revenue from the company's UK and European based businesses rose by 1% following strong domestic mechanical ventilation system demand.
Executive chairman Keith Ritchie, said: "In South Korea, the Group's largest net profit contributor, 2019 saw growth in GDP of about 2.0%, which is also below trend. In 2020 and 2021, GDP is forecast to grow by 2.2% and 2.3% respectively as the Government continues its expansionary fiscal stance together with two interest rate cuts by the Bank of Korea.
"For Titon, it will be a year of transition for its natural ventilation products in South Korea as economic growth recovers and new products are launched. Revenue at Titon Korea in fiscal 2020 will be lower than in 2019."
Titon Holdings shares were down by 5.56% at 127.50p at 1543 GMT.