(Sharecast News) - Home safety technology company FireAngel said in an update on Tuesday that it anticipated a first-half performance in line with its expectations.
The AIM-traded firm, which was holding its annual general meeting, said demand remained higher than its ability to supply, and was expected to remain elevated for the rest of the year.
Executive chairman John Conoley said that in the first few months of this year, as expected, the company continued to absorb additional costs due to inflation, impacting margins.
"We began to see the impact of mitigation activity on the company's gross margin performance in the second quarter, in line with the board's expectations, and gross margin is expected to improve more strongly in the third quarter onwards," he told shareholders.
"Further targeted price rises of the company's products are already scheduled for later this year as additional protection against rising input prices.
"While inflation was in part driven by component shortages, those components have been easier to procure as the second quarter has progressed, which has most recently enabled the company to rebuild volume production of previously restricted higher margin products."
Conoley said Covid-19 challenges had "barely impacted" FireAngel in the year-to-date, with the "very difficult" supply situation easing.
"The company has identified enough components to be able to reach its revenue goals this year.
"Foreign exchange, especially the relationship between the US dollar and the British pound, has become more volatile than anticipated.
"Despite this, and the unprecedented challenges the company has faced, the board still expects the company to meet its market expectations for the year ending 31 December."
The FireAngel board was monitoring the macroeconomic situation, John Conoley said, and was "ready to respond" as needed.
He added that the firm had experienced no direct impacts from Russia's ongoing invasion of Ukraine thus far, and did not directly source any materials from the country.
"The fundraising announced in April 2021 provided the company with the necessary funds to deliver its strategic goals and the net proceeds have laid the foundation for the company to return to profitability and positive cash generation
"As announced on 20 June, the standby letter of credit secured through our bank HSBC UK will assist the company in securing longer-term component procurement than was previously required, thereby easing the credit relationship between certain suppliers and the company, and ultimately offering further certainty on production volumes."
As previously announced, Conoley said net debt was expected to be "materially lower" than expected at the half-year, although debt levels would converge with expectations again as the second half progressed.
"FireAngel's compelling proposition to protect and save lives with innovative home safety technology remains strong and the group is well positioned for future growth.
"Legislative and societal direction continues to support demand for the company's products."
At 1109 BST, shares in FireAngel Safety Technology Group were up 2.36% at 11.11p.
Reporting by Josh White at Sharecast.com.
Fireangel (FA.)