Shares in Samuel Heath & Sons PLC (AIM:HSM) dribbled 15% lower to 340p after the maker of taps and bathroom fittings revealed a significant slump in its order book as trading conditions have "worsened materially" in the UK and Europe.
The second half is now expected to slump to a loss after redundancy costs, unless sales improve.
"We have taken soundings from our UK and EU marketplace and there is no expectation that things will improve during this calendar year. Orders and projects remain out there but, in some cases, have been put on hold in the current uncertain economic environment," said chairman Anthony Buttanshaw, with only the US seeing a confident outlook at the moment.
He said the board hopes the company can remain in the black for the year as a whole and that sales will recover early in the new calendar year.
Sales for the half year to 30 September increased 3% to £7.8 million but operating profits fell 28% to £441,000 due to a 37% hike in energy costs, increased spending on tooling and a step up in recruitment.
The firm's cash reserves also took a hit, dropping £1.24 million to £1.5 million since March, as investments were made in production equipment, a £300,000 interim pension fund contribution and £192,000 in dividend payments.
Delays in regulatory approvals for its new 'Forme' range in overseas markets and the "much weaker" order book has led to costs being cut, including a 7% reduction in the workforce.