LONDON (Alliance News) - Mpac Group PLC on Thursday said its loss widened in the first half of 2018, hurt by delays in two legacy contracts.
The packaging firm said its pretax loss widened in the six months to the end of June to GBP600,000 from GBP200,000 reported for the same period a year ago, taking a hit from higher cost of sales, which rose to GBP22.3 million from GBP18.3 million.
Revenue rose 11%, however, to GBP28.2 million from GBP25.4 million the year before.
The company also managed to reduce its distribution expenses to GBP2.4 million from GBP2.8 million, while administrative costs dropped to GBP4.0 million form GBP4.1 million.
Mpac said it experienced significant order intake headwinds in the first half of 2018 with order intake 20% below the level seen in the year prior. The company said it has reviewed the current order book to confirm that projects remain on track within contractual terms.
Gross margin fell to GBP5.9 million from GBP7.1 million year-on-year due to the engineering difficulties with two technically challenging legacy projects in the UK and Canada, Mpac said.
The Canadian project encountered issues during the commissioning phase as the consumer products, which were previously hand packed, are now automated.
Meanwhile, the UK-based project, caused the time and cost over-run due to the complexity around the software and control aspects, the company explained.
"It's been a mixed start to the year, with good progress in a number of areas, counter-balanced by delays in two legacy contracts," said Chief Executive Tony Steels.
"I am disappointed that the momentum built in the previous year has been slowed due to the current business environment with investment decisions taking longer to conclude, however since the end of June 2018 a significant value order was secured for delivery in 2019 which gives us further confidence that the strategic objectives will deliver long term revenue growth," added Steels.
Mpac shares were trading 2.5% higher on Thursday at 122.00 pence each.
Mpac Group Plc (MPAC)