UK engineer IMI plc (LON:IMI) shares plummeted after it confirmed that second-half revenue would lower than the previous year, as a slump in the oil and gas sector affected orders.
Chief executive Mark Selway said the company continues face market headwinds, particularly in the Critical Engineering business, which provides flow control products to the energy industry.
Lower oil prices and an ongoing lack of investment has dented orders and pricing across the energy industry.
The revenue warning for the second half came as the group reported first-half revenue of £846mln, up 11% when including the benefit of foreign exchange rates, acquisitions and disposals, but flat after adjusting for these effects.
Pre-tax profit rose 13% on a reported basis to £98mln, helped by the pound's weakness against the euro and the dollar.
IMI continued to restructure its business with an overhaul of its European operations in the Critical Engineering arm and Precision Engineering, which specialises in motion and fluid control technologies.
Net debt at the end of the period stood at £318mln, compared to £334mln the previous year. Operating cash flow edged up 1% to £86mln, including favourable exchange rates and improved inventory management.
Operating margins fell 10 basis points to 12.5%, due to an increase in the cost of raw materials. However, the group expects margins to recover in the second half on rationalisation savings and improved market conditions in Precision Engineering.
The dividend was lifted 1.4% to 14.2p, which the company said reflected continued confidence in its prospects.
"Based on current market conditions, we expect full year 2017 results will be modestly above current market expectations."
Shares fell 3.46% to 1,240p in morning trading.