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Solid State margins dragged down by communications arm
Computing, power and communications products manufacturer Solid State warned investors on Thursday that problems in its communications business would impact margins over its next two years, sending shares into freefall in early trading.
The AIM-listed company said it expects to post pre-tax profits in line with market consensus for the 12 months ended 31 March of roughly £3m on revenue slightly ahead of expectations up 15% at around £45.5m.
But, as foreshadowed in its interim report back in October, the firm confirmed that trend of its longer-than-expected lead time to win new business within its communications unit had, as feared, extended into its second half.
Solid State warned that its 2018 and 2019 financial years were likely to be impacted by the lead time issues, as well as by difficulties experienced by the firm in its efforts to secure overseas business in its communications wing, but stated that looking forward, its management remained confident that prospects across its other business units were positive.
"We have delivered significant organic growth for the year ended 31 March 2018, maintained margins across our markets and customers and have increased the open order book at 31 March 2018 to £19.6m (31 March 2017: £18.4m)," the group said.
As of 1100 BST, shares had lost 25.53% to 280.00p.