Shares in React Group PLC (LSE:REAT) tumbled almost 22% on Tuesday after the company warned that full-year results are now expected to fall below market expectations, despite posting double-digit revenue and profit growth for the first half.
The specialist cleaning and facicilities manegement support provider said revenue rose 14% to £12.1 million in the six months to 31 March, with adjusted EBITDA climbing 12% to £1.4 million.
Numbers were boosted by its recent acquisition of 24hr Aquaflow Services, which added £2.8 million of revenue and £827,000 of EBITDA.
Otherwise, the company blamed economic pressures, rising customer costs and longer sales cycles as reasons for the full-year downgrade.
“In light of prevailing sector specific and global economic pressures extending business decision cycles, particularly for higher value contracts, the board is adopting a cautious approach to conversion of new business in the second half of FY 2025 and results are now expected to be below market expectations,” the company said.
CEO Shaun Doak said that while REACT had delivered a “robust first-half performance,” organic growth had been hampered by customer hesitation amid rising national insurance and living wage costs.
“The successful integration of 24hr Aquaflow Services has been a key growth driver, helping to offset some of the challenges in specialist cleaning,” he added.