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600 Group warns on profits as machine tool demand weakens

Manufacturer said difficult autumn trading and customer reluctance to place orders had continued into 2016
600 Group warns on profits as machine tool demand weakens
Customers were leaving purchasing decisions until the last minute

Machine tool maker 600 Group (LON:SIXH) blamed weak markets and last-minute buying by customers for a profit warning.

The AIM-listed company said difficult autumn trading and customer reluctance to place orders had continued into 2016 while weakness in European machine tool markets had spread to the US.

It said customers were leaving purchasing decisions until the last minute and consequently order books overall were at a little over one month.

With general economic and in particular manufacturing forecasts being weak, future trading was difficult to predict and volatile.

Cost cuts were expected to save about £1mln a year going forward and benefits from its acquisition of two laser marking businesses were boosting margins.

The group, which has machine tool and precision engineered parts divisions as well as the laser marking operation, said sales and marketing initiatives in both divisions were succeeding but were unlikely to offset the effect of lower volumes in machine tool markets.

"As a result of the above factors, the group's results are expected to be below current market estimates," the company said in a trading update.

It added that it still hoped that selling its brands such as Colchester, Harrison, Clausing, TYKMA and Electrox through an increased worldwide distribution network would boost revenue growth and that cost cuts would result in better margins on increasing sales.

Shares in the company plunged 20% to 10.5p.

 

 

 

 

 

 

 

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