Gattaca Plc (LON:GATC) saw its shares plunge in early morning trading Thursday after it reduced its full-year underlying pre-tax profit forecasts to 15% below previous expectations.
The engineering and tech recruiter said in its interim results that economic conditions had become more challenging in some of its sectors and territories since a trading update released in February, which alongside an ongoing programme of cost reduction led to the downgrade in its earnings forecast.
Declines in pre-tax profits despite fee income increase
In the first 6 months of its financial year, the group saw underlying pre-tax profits decline 17% to £6.9mln compared to the same period last year, based on underlying revenues of £323.3mln, a 2% reduction on the first half of 2017.
This was despite an increase in underlying net fee income (NFI), which rose 2% to 39.8mln compared to the same period a year ago.
The group also cut its interim dividend by 50% to 3p, reflecting what it said was a resetting of dividend policy announced in a February trading update to target “a pay-out of 50% of PAT [profit after tax] through the cycle, subject to a sustained reduction in net debt from the 2019 financial year onwards”.
Gattaca said its telecoms division continued to be a challenging area, with the division suffering pricing pressures from key customers combined with a reduction in volume.
Shares were down 24.8% at 145p.