Newmark Security PLC’s (LON:NWT) investment in new products, customer acquisition and in new territories has contributed to its problems this year, said broker Cantor Fitzgerald.
Shares in the group tumbled Thursday after it warned that it now expects to report a loss for its current financial year.
The security system provider had previously warned back in April that profits would be “significantly lower” than last year’s pre-tax profit of £2.3mln.
“On a positive note, there was net cash of £4.1mln at the end of April,” Cantor added.
Maturing contracts, declining sales of certain legacy systems and the postponement or delay of access control contracts following Brexit sparked the warning, said the broker.
“Whilst the opportunity pipeline continues to grow, the conversion into sales is slower than management had hoped.“
The board was particularly concerned with the Asset Protection division, with the pipeline and outlook for the rest of year suggesting that the recent slowdown won’t be reversed in the near future.
Improving sales of its SATEON product line in the Electronic Division have been offset by the decline in revenues from its JANUS line, the company added.
Newmark said it had not been helped by the fact that several customers have recently had troubles of their own and have been forced to delay some projects.
Sales were struggling in the Asia Pacific region, although the US office had seen 8% growth in workforce management (WFM) revenue.
The firm is preparing to launch a new Android-based WFM terminal next month, which should benefit the group in the next financial year, Newmark added.
"The results for the year to date have been very disappointing albeit in a period of investment and challenging markets,” said chief executive Marie-Claire Dwek.
“We have and continue however, to initiate programmes to cut costs which will improve our financial position going forward, whilst continuing with the launch of new products which the board are optimistic will underpin future growth."
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