Light Science Technologies Holdings PLC (AIM:LST) (LSTH) said its sales pipeline remains strong due to the need for food security but that rampant cost inflation is drawing out the sales cycle, meaning that revenue and losses for the year are not expected to meet market expectations.
The maker of specialist lighting used in greenhouses, polytunnels and vertical farming said group revenue grew roughly 10.5% in the year ended 30 November 2022, which it said was around 13% below market expectations.
AIM-listed LSTH said its sales pipeline stood above £60mln, including forward orders and contracts worth £18mln.
The elongation of the sales cycle was predominantly attributed to input inflation experienced by its grower customers that they are struggling to pass on to their customers, leading to delays in capital expenditure and delays to the revenues that had been expected in recent months.
On top of that, LSTH said gross margins at its contract electronics manufacturing (CEM) division have been diluted in the second half of the year by significant price volatility in the global electronics component market.
As a result of the combined factors, loss before tax for the 2022 financial year is expected to be approximately £850,000 higher than expectations.
"The benefit of the conversion of the pipeline will, in the board's view, fall into the year ending 30 November 2023, accompanied by a return to normalised gross margins at the group's CEM division.
“Notwithstanding the challenges faced, the board will be building on the 10.5% revenue growth and is confident the overall prospects for the company remain strong,” LSTH said.