LONDON (Alliance News) - Shares in wireless components company Laird PLC almost halved in value Wednesday morning as the company said it anticipates its adjusted profit will slump in 2016 following a disappointing third quarter.
Shares in Laird dropped 46% to 165.20 pence early Wednesday, by far the worst performer in the FTSE 250 and leaving the stock down by 53% in 2016 to date.
Laird designs, develops and supplies components for the wireless connectivity space and that protect electronic devices from electromagnetic interference and heat.
In its interim results in July, Laird had slightly softened its previous confidence guidance for 2016, saying its expectations for the year were "broadly unchanged" but that it anticipated a greater weighting of its results to the second half.
On Wednesday, Laird said that following the disappointing first half, it had expected a better second half, particularly in its Performance Materials unit. However, it said the acceleration of mobile devices production has come much later in the cycle than previously and visibility on volumes for the business "remains poor".
In addition, pricing pressures and some "operational factors" have resulted in increased margin pressure on the business, Laird said.
As a result, it expects underlying pretax profit, before exceptional items, will be around GBP50.0 million for 2016, a sharp fall on the GBP73.1 million it made in 2015.
Laird said it is taking action to improve its Performance Materials unit's position, including cutting costs and managing cash.
In total, revenue for the third quarter rose to GBP207.0 million from GBP160.0 million a year earlier, a 29% rise resulting entirely from translation gains on the weak pound against the dollar. Organic revenue, in constant currencies, was down 4.0%.
In Performance Materials, organic revenue declined 5.0% year-on-year in the third quarter, blamed on the slower production ramp-up for mobile devices. Performance Materials generates around two-thirds of Laird's revenue.
In Laird's Wireless Systems unit, organic revenue was down 3.0% in the quarter. This division has been hit by challenges faced by its WACS business, which dragged down the rest.
WACS had been a primary contributor to a 71% slump in interim profit for Laird as a whole. In the first half, WACS was hit by a "rapid and substantial downturn" in US freight markets, and the situation does not appear to have improved.
"We are very disappointed by these adverse developments in the mobile devices market for our Performance Materials division, at a time when other parts of the business continue to perform well. We are confident that the actions we have taken will stabilise and improve the business," said Laird Chief Executive Tony Quinlan.
"Moving into 2017, the work to improve our operating model is progressing well and we are on track to deliver the associated significant financial benefits. This, together with the Novero turnaround, as well as the positive momentum in our automotive business, will improve performance next year and beyond," he added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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