CONCERNED customers putting off major orders in the last quarter of the year means Stadium Group’s results will be “significantly below” market expectations, the company has revealed.
The Hartlepool-based electronics business, which operates worldwide, said it is suffering from the same issues as other suppliers in its sector. It pointed to the trend of clients holding back from making large orders because they are concerned about the economic climate.
Chief executive Stephen Phipson said: “In common with most other electronic businesses, basically a lot of customers are saying for the last quarter ‘we don’t want much because we are not optimistic about the economy’.
“The larger customers are deferring things until next year but it doesn’t affect the UK. What has affected us is the bigger contracts which we do in China – Hartlepool is not affected.” The group employs around 1,000 people internationally making electronic parts ranging from smart water meters to automotive components.
Phipson said that no particular products were hit and that the volume orders were down across the board, in some cases by between 10% and 30%.
He said: “Do I believe we are out of recession? No I don’t, not yet. People are very concerned about the future.
“We have taken action to restructure our Chinese operation and we have sold a property in Hong Kong.
“There are no job losses in Hartlepool and we are focusing on Hartlepool and putting more work in. It is the volume manufacture which is where the problems are.”
Stadium’s property sale in Hong Kong is expected to be completed by the end of the year and is set to bring in £3m in cash and a £2.2m exceptional profit, ahead of earlier expectations.
Phipson said: “We are feeling quite positive about next year. But we think it is going to be flat.”
Stadium’s sales for the year to December last year were flat at £44.94m but pre-tax profits rose 38% to £3.96m.
Eric Burns, from broker WH Ireland, said: “This should not come entirely as a surprise, witness recent trading updates from TT Electronics.
“This seems very much a function of larger customers exercising a higher degree of caution, deferring orders that were expected to land prior to the year end.
“While we do not have forecasts published, noting the comment that H2 will be weaker than H1, we would expect the full year PBT outcome to be in the region of £1.2m (EPS circa 3p) against current consensus of circa £2m (5.3p).
“The disappointment in the statement detracts from an otherwise interesting growth story.”
There are no job losses in Hartlepool and we are focusing on Hartlepool and putting more work in