Mpac Group (LSE:MPAC) shares fell 14.3% to 224.89p after the packaging machinery specialist warned that profits this year will be substantially below market expectations.
The engineering group also announced the sale of its Lambert business for up to £20 million to reduce debt.
Trading conditions for the group were said to have remained difficult since annual results were released in April, with customers continuing to delay capital investment decisions.
Increased competition for original equipment orders and lower production volumes have also weighed on margins.
As a result, Mpac now expects first-half margins to be below the prior year and full-year underlying profit before tax to be substantially below current market forecasts on a like-for-like basis.
The company said it has responded by reducing overheads, aligning operational capacity with demand and taking steps to improve cash generation.
Despite the weaker outlook, Mpac reported that its order book had increased to £98.8 million at the end of May from £90 million at the end of December.
Alongside the trading update, Mpac announced the sale of Mpac Lambert to Italy's Mech.i.Tronic for an initial cash consideration of £16 million, with a further earn-out of up to £4 million linked to 2026 performance.
Lambert, which was acquired in 2019 for £15 million, generated a loss before tax of £1.6 million in 2025 and had net assets of £2.1 million at the year end.
The proceeds will be used to reduce net debt, which stood at £47.9 million at the end of 2025. Completion is expected in the third quarter, subject to regulatory clearance under the National Security and Investment Act.
