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LONDON (Alliance News) - Gooch & Housego PLC on Tuesday said its profit dropped sharply in the first half of its current financial year due to a downturn in demand for laser components.
The stock was trading 22% lower on Tuesday at 1,050.00 pence a share.
In addition, the AIM-listed company said Chief Operating Officer Alex Warnock will step down at the end of September after five years in the role. G&H said it currently does not intend to replace Warnock and the three manufacturing heads will report directly to Chief Executive Mark Webster.
"He [Warnock] has transformed G&H's operations function, professionalising it and putting in place a modern, scalable structure with a capable and experienced management team," said Webster. "I would like to thank him personally for his support and advice."
The optical components manufacturer said pretax profit in the six months to the end of March dipped to GBP1.5 million from GBP5.2 million reported a year earlier. Administrative expenses grew to GBP10.4 million from GBP8.5 million year-on-year, while net finance costs increased to GBP1.5 million from GBP444,000.
Revenue, meanwhile, rose to GBP59.7 million from GBP55.6 million the year ago. G&H highlighted that, excluding the impact of foreign exchange, revenue growth was 4.1%, and excluding the impact of foreign exchange and acquisitions, revenue fell by 5.4%.
G&H explained that it has seen a downturn in demand for critical components used in industrial lasers for microelectronic manufacturing, particularly from China.
In contrast, demand for fibre optic products and hi-reliability fibre couplers used in undersea networks is strong.
Interim dividend increased by 2.4% to 4.3p from 4.2p paid the year prior, reflective of the company's longer term confidence in the business, it said.
"G&H has long been aware of the risks associated with the cyclical nature of the microelectronics sector and more recently the continued impact of the US-China trade dispute," said Webster. "We now forecast the industrial laser business will not return to 'normal' levels in financial 2019."
Looking ahead, G&H said it now expects its adjusted pretax profit to come in between GBP3.5 million and GBP4.0 million. In its financial 2018, the company reported adjusted pretax profit of GBP18.8 million.