Gama Aviation PLC (LON:GMAA) warned that its annual profits would come in around US$3mln below its expectations after it was hit by subdued recent trading across its divisions, sending its shares into a tailspin.
The aircraft maintenance and management group said on Monday that the “substantial growth” it had predicted at its interim results had not materialised and that trading in certain divisions has not improved sufficiently to deliver the full year expectations.
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The company said that while no individual division was significantly weaker, there had been an overall material impact, which led the board to believe that its annual operating profit would be some US$3m below its original expectations.
Gama said the performance of its Europe, Middle East and Asia air divisions remained stable, despite difficult trading conditions in Europe and the Middle East.
The profit from the group's US Air associate, however, is now not in line with expectations for the full year due to slower than the expected growth in charter and aircraft management revenues, it said.
In its European ground division, Gama said its assumed a level of revenue growth during the period it moved its operations from Farnborough and Oxford airports to Bournemouth International Airport had proved too ambitious in the circumstances. The company, however, added that it expects a proportion of these lost revenues to be realised in 2019.
The US ground division continues to deliver strong organic growth and solid productivity. However, the growth in maintenance revenues, while strong, has not been at the level required to achieve its expectations, partly as a result of it taking longer for new capacity to come on stream, Gama said.
Meanwhile, in Asia, the group's associate China Air Services Limited had continued to underperform with the unexpected loss of contracts significantly impacting margins in an operationally geared business. The company said plans were already in place to reduce costs and recover margins.
"The reduction in our expectations for this year is disappointing with the growth that we had anticipated not coming through as strongly as expected,” CEO Marwan Khalek said in a statement.
"Nonetheless, we are still expecting healthy growth for the year whilst continuing to make good progress in building capability and capacity and securing encouraging new business in all of our key markets. The fundamentals of our business remain strong."
Shares in Gama were 31.0% down at 105.0p in early trade.