Mpac Group (LSE:MPAC) shares fell 27% to 314.7p after the packaging group reported a material slowdown in order intake in the second quarter, particularly in North America, which means full-year revenues and profits are expected to be lower than hoped.
Its services business has remained "broadly unaffected", with its 2024 acquisitions BCA and CSi continuing to trade in line with management expectations, with palletising/casing specialist CSi benefiting from limited exposure to the US.
As a result of the slower trading in North America, management has decided to close a facility in Cleveland, Ohio, as part of an acceleration of its post-acquisition efficiency plans, with production transferred to BCA’s Boston plant. This is expected to drive productivity and sustain margins, despite the sales shortfall.
"During the later part of the first half of 2025 we have seen the impact of US trade tariffs, falling consumer confidence, and growing economic uncertainty," said chief executive Adam Holland.
"Customers have increasingly chosen to defer capital investment decisions, with the Americas region being at the epicentre, with other regions less impacted to date.
"Despite resilient first half revenues, the slow down in order intake through H1 2025 means that we must take prompt action now, in anticipation of lower full year revenues and profit than previously expected," he said.
The shortfall in customer deposits arising from reduced orders resulted in a "marginal" increase in net debt, but with actions taken to reduce debt, the group remains within its covenant limits.
Broker Panmure Liberum cut its full-year adjusted pre-tax profit forecasts by 25% and those for 2026 by 32%.
Separately, Mpac announced a 'buy in' transaction for its UK defined benefit pensions scheme, which it said will "help simplify the group's balance sheet and eliminate a significant risk to Mpac's future profitability and cash flow".