(Alliance News) - Renold PLC said Friday it expects a GBP1 million hit to profit due to the impact of the coronavirus, and warned that challenging market conditions, experienced in the first half of the year, have continued in to the second half.
Renold shares were trading 9.2% lower in London at 11.44 pence each on Friday.
The supplier of industrial chains said it expects operating profit to decline by GBP1 million for the year ending March 31, due to the impact of the coronavirus. Pretax profit in 2018 was GBP11.2 million.
The company said although its Chinese factory, which was closed for almost a month, has now re-opened, staffing levels have not yet fully recovered.
"In addition, the extensive disruption and the limited visibility of third party supply chains into both the Chinese factory and our Australasian Chain business, means that there remains uncertainty as to the performance of these business units over the coming months," the company said.
Renold expects there will be profit drag across February and March that will not be recoverable before the end of the year.
In November, the company reported a decline in profit in the first half, due to a "more challenging economic backdrop". Pretax profit declined by 2.8% to GBP3.5 million in the six months to the end of September from GBP3.6 million reported a year prior, whilst revenue remained flat at GBP98.2 million.
"As anticipated, these challenging conditions have continued into the second half of the year, with the greatest weakness evident in the US and European markets," Renold said.
However, the company said it has been effective in mitigating the impact and is on track to deliver an adjusted operating profit in line with current market expectations.
Robert Purcell, chief executive officer, said: "Whilst market conditions remain challenging in the near term and a level of uncertainty remains over the longer-term implications of coronavirus on our business, we are encouraged by the positive impact of our ongoing strategic initiatives."
By Loreta Juodagalvyte; loretajuodagalvyte@alliancenews.com
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Renold (RNO)