Flowtech Fluidpower (AIM:FLO), the hydraulic and pneumatic component engineer, slumped nearly 20% on Monday after issuing a full-year profit warning in a first-half trading update.
Revenues for the Flowtech division, the arm aimed at selling fluid power products across all industry markets, dropped by 5.7% year-on-year to reach £26.6mln in the first half of the 2023 financial year.
Fluidpower Services and Solutions, the group’s two other arms which target original equipment manufacturers (OEMs), rose by 9.5% and 11.2% respectively, but because of lower gross margins in these divisions and the difficulty of Flowtech operations, full-year 2023 underlying profits are expected to come in behind the board’s expectations.
Overall, total group revenue came in at £59mln for the first half, representing a 2.6% increase annually, while net debt year-on-year dropped by over £4mln to reach £15.6mln.
Mike England, Flowtech’s newly appointed chief executive officer, has targeted new capital investment and addressed legacy issues in a bid to tackle the “commercial and operational shortfalls”.
"There are however adverse market headwinds into HY2 with several OEMs citing a slowdown in project velocity and a more general cooling across the broader industrial markets,” he warned. “For these reasons, the Board now expects the out-turn for FY23 to be significantly behind previous expectations.”
Flowtech shares opened on Monday at around 95p.