Newmark Security PLC (AIM:NWT) said its board is confident that the group is well positioned to navigate current market conditions for the rest of the financial year.
The provider of electronic and physical security systems said it has not been immune to the worsening supply chain issues around the world, which has included material increases in freight costs and shipping timeframes, as well as increasing component costs and reduced availability.
Newmark said it had sought to bolster levels of stock held in order to build a buffer to ensure that the supply chain issues do not impact its ability to fulfil existing and anticipated client orders, and to better withstand the risk of future supply-chain disruption.
This increased working capital outlay, coupled with the significantly higher freight costs and increased component costs, has negatively impacted gross margins and cashflows in the first four months of the current financial year, which ends next April.
However, the company said it has started a number of initiatives to improve profitability and cashflows.
Along with increasing demand from the United States and an improvement in revenues and margins in September, these initiatives provides the board with confidence.