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Tungsten lowers guidance amid 'challenging market conditions'
27th Nov 2020 08:26
(Sharecast News) - Software solutions provider Tungsten warned on Friday that it had experienced "challenging market conditions" during the second quarter of its trading year, leading it to "materially lower" guidance.
Tungsten stated that transaction volumes had declined 7% year-on-year in the first half and were now expected to remain at lower levels for the remainder of the 2021 trading year.
New business momentum was said to be "positive", with Tungsten securing four new customer wins during the half. However, the group cautioned that it had also witnessed a longer sales conversion cycle and anticipates that full-year revenues will be similar to those recorded in the prior year.
Underlying adjusted earnings were pegged to be at least £3.2m, materially lower than previous guidance.
The AIM-listed company added that it expects the macroeconomic environment to remain "challenging" over the coming months but it does anticipate that, with the gradual easing of Covid-19 restrictions, transaction volumes will begin to return to pre-Covid levels in the 2022 trading year.
Chief executive Andrew Lemonofides said: "Tungsten has faced a difficult and unpredictable market in 2020. In spite of these challenges and the decline in transaction volumes, we have won new customer relationships and we expect to deliver broadly similar revenues to FY20.
"It is disappointing that our profitability is going to be materially lower that we expected this year, however the company remains focused on improving efficiency and converting its pipeline of opportunities to drive growth in sales."
As of 0825 GMT, Tungsten shares had sunk 20.13% to 25.0p.
Tungsten stated that transaction volumes had declined 7% year-on-year in the first half and were now expected to remain at lower levels for the remainder of the 2021 trading year.
New business momentum was said to be "positive", with Tungsten securing four new customer wins during the half. However, the group cautioned that it had also witnessed a longer sales conversion cycle and anticipates that full-year revenues will be similar to those recorded in the prior year.
Underlying adjusted earnings were pegged to be at least £3.2m, materially lower than previous guidance.
The AIM-listed company added that it expects the macroeconomic environment to remain "challenging" over the coming months but it does anticipate that, with the gradual easing of Covid-19 restrictions, transaction volumes will begin to return to pre-Covid levels in the 2022 trading year.
Chief executive Andrew Lemonofides said: "Tungsten has faced a difficult and unpredictable market in 2020. In spite of these challenges and the decline in transaction volumes, we have won new customer relationships and we expect to deliver broadly similar revenues to FY20.
"It is disappointing that our profitability is going to be materially lower that we expected this year, however the company remains focused on improving efficiency and converting its pipeline of opportunities to drive growth in sales."
As of 0825 GMT, Tungsten shares had sunk 20.13% to 25.0p.