Shop fitter Havelock Europa today warned that its annual profits will fall short of its board’s hopes after a number of customers in the retail and financial sectors deferred their orders.
Havelock Europa, which counts high street lender Halifax and fashion chain Primark among its clients, also told investors that it expects to rack up almost £1 million in costs related to senior management changes and a shake-up of its Stage Systems business.
In a trading update, the Fife-based company said profits before one-off charges in the year to 31 December “will be below the board’s previous expectations and last year’s profit of £632,000” after some customers in the retail and financial sectors pushed back orders.
The warning saw shares in the group end down 1.88p, or 9.7 per cent at 17.5p, having hit a session low of 16.5p.
Yesterday’s profit alert came just two months after Havelock announced a 5 per cent fall in first-half revenues to £32.5m amid a decline in education activity and “quieter” conditions in the financial services sector.
Commenting on September’s interim results, chairman David MacLellan said the first six months of its financial year had been “challenging”, but he was confident that efforts to improve the Dalgety Bay group’s performance and efficiency “will lead to a stronger second half of the year”.
“However, achievement of the company’s expectations for the second half of the financial year remain dependent on the finalisation of orders and delivery schedules for the fourth quarter,” he added at the time.
Havelock yesterday described its second-half performance as “disappointing”, but said it hoped to begin the new year with an “improved pipeline” of work as the delayed orders feed through an conditions in the education arena begin to recover.
Sales at the firm’s educational supplies arm dropped 9 per cent to £3.2m in the first half. The fall was blamed on project delays and the UK government’s decision to give all infant pupils in England free school meals, which saw many schools using their discretionary cash to upgrade canteens rather than spending it in the classroom.
The division was also hit by a shift away from higher-margin stage products towards sound and lighting projects, prompting Havelock to seek ways of reducing costs and focusing on the core stages business.
This restructuring will lead to one-off costs of about £380,000 in the second half, combined with £520,000 as a result of “senior management changes”. Earlier this year, finance director Grant Findlay resigned after a nine-year stint with the company and was replaced by Ciaran Kennedy, previously operations director for construction group Kier’s Scottish utilities business.
Before joining Kier, Kennedy spent 17 years in a variety of finance and operational roles at building materials firm Ennstone.
Chief executive Eric Prescott said yesterday: “While it is disappointing that profits will be below expectations, the outlook remains positive and the board is confident of achieving its expectations for 2015.”
Aim-quoted Havelock has about 550 staff, including more than 400 in Fife, and recent projects include the fit-out of a Halifax branch on Edinburgh’s Prince Street. It also carries out work for retail chains Boots, Marks & Spencer and Primark.
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