Carclo (LSE:CAR) PLC shares fell to their lowest in three years after the maker of high-precision components reported a decline in first-half revenues and swung to a loss, with tough market conditions expected to continue in the US particularly.
A major restructuring plan for the US business is being carried out to cut costs and improve efficiency, though the full-year benefit is not expected to be realised until the subsequent financial year.
Revenue from continuing operations decreased 7.2% to £66.9 million, with challenging market conditions in the life sciences sector, as demand for diagnostic equipment fell with key customers adjusting to post-Covid requirements.
The company had benefited from the demand from in vitro diagnostics companies for components for PCR-based diagnostic testing during the pandemic.
A focus on margins partially mitigated the effect of the reduced volumes, while robust demand from the aerospace sector also was a positive.
Underlying operating profit from continuing operations fell to £2.2 million from £3.6 million, with currency swings not helping.
At the statutory level, Carclo (LSE:CAR) swung to a £2.2 million loss before tax from a £0.7 million profit a year ago, having also made a loss for the past full year.
Cash generated from operations rose to £11.4 million from £0.5 million, mostly from more strict working capital management.
Chief executive Frank Doorenbosch said the company “responded robustly to the fall in demand by our major customers by adapting our business to achieve enhanced contribution margins through increased efficiency”.
He said this activity will continue through the second half “to place the group on a sound footing for FY 2025, so that we are well placed to satisfy the future recovery in demand and retain our position as the trusted partner of major blue-chip customers, in markets with medium to long term demand”.
Carclo shares slumped 28.25% to trade at 8.61p at 9.25 am.