Zytronic (AIM:ZYT) saw its shares start sharply lower in Thursday’s trading after the touch-screen manufacturer issued a profit warning.
The company, in a statement ahead of interim results later this month, told investors it will report lower-than-expected revenues due to “unpredicted significant turmoil” in its slot gaming market.
It also cautioned that it continues to be impacted by previously reported trends, flagged at February’s AGM
Zytronic said it now anticipates first-half revenue of about £4.7mln and full-year revenue in the range of £8.0mln to £8.8mln.
In the gaming market, it cited two main sources of volatility. First, an over-stocking situation with one customer which led to lower-than-expected first-half revenues and potential delays to orders, possibly into the 2024 financial year.
Secondly, it has been significantly impacted by a Chapter 11 bankruptcy filing by Aruze Gaming America Inc (which occurred in February 2023), which was the end-customer to multiple clients of Zytronic.
It noted that the Aruze impact results in some £300,000 of trade receivables, which were due in February and March, being classified as ‘doubtful debts’ and additionally some £200,000 of manufactured stock will also be fully written down.
Moreover, it no longer expects previously forecast further orders related to Aruze.
Zytronic told investors that its gaming segment revenues are unlikely to recover before the end of the current financial year.
Commenting on its outlook, the company added: “[it has] not only had a significant impact on management's expectations for the first half performance, but also the predicted improvement that management had expected would occur in the second half.”
Nonetheless, the company described its balance sheet as “strong”, with £4.5mln of net cash as of 30 April 2023 (compared to £6.4mln at 30 September 2022).
In London, Zytronic shares were down 36p or 25.7% changing hands at 104p each, valuing the company at just over £10.5mln.