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Touchstar warns on profits as Brexit uncertainty hampers orders
18th Dec 2019 10:12
(Sharecast News) - Touchstar on Wednesday cautioned that long lead times and political uncertainty mean that annual profit and revenue are now expected to be below previous expectations.
The mobile computing group said customers had been reluctant to place orders due in the fourth quarter due to political uncertainty, while the race to deliver on some high value contracts prior to the year-end was impacted by extended lead times for obtaining stock.
Consequently, delivery of these items will now be completed in the first quarter 2020.
These factors will have a knock-on effect to profitability in the current financial year, with profit after tax and at pre-tax level now likely to lag below prior expectations.
Meanwhile, revenue is forecast to come in at £7m, which would represent 10% growth from continuing businesses.
Looking to next year, the AIM traded company said that the recent disposal of its On-Board division, consequential cost savings, a strong order book and positive reactions to its new products boded well.
"With the level of political distraction now reduced, it is probable that the trading in our most economically sensitive part of the business, namely Logistics, will stabilise and recover, rather than record a 20% decline as is expected this year (as customers deferred their investment decisions)," added Touchstar.
Touchstar shares were down by 6.34% at 33.25p at 1022 GMT.
The mobile computing group said customers had been reluctant to place orders due in the fourth quarter due to political uncertainty, while the race to deliver on some high value contracts prior to the year-end was impacted by extended lead times for obtaining stock.
Consequently, delivery of these items will now be completed in the first quarter 2020.
These factors will have a knock-on effect to profitability in the current financial year, with profit after tax and at pre-tax level now likely to lag below prior expectations.
Meanwhile, revenue is forecast to come in at £7m, which would represent 10% growth from continuing businesses.
Looking to next year, the AIM traded company said that the recent disposal of its On-Board division, consequential cost savings, a strong order book and positive reactions to its new products boded well.
"With the level of political distraction now reduced, it is probable that the trading in our most economically sensitive part of the business, namely Logistics, will stabilise and recover, rather than record a 20% decline as is expected this year (as customers deferred their investment decisions)," added Touchstar.
Touchstar shares were down by 6.34% at 33.25p at 1022 GMT.