Adhesive products manufacturer Scapa Group has issued a profit warning ahead of its full-year financial results.
The Ashton manufacturer said its trading profit for the year to March 31 is expected to be “significantly below consensus” at approximately £28m.
Shares in the group dropped as much as 97.64p this morning, from 272p at last close yesterday (February 11) to 174.36p this morning.
Trading profit of its healthcare operations is expected to be lower than consensus, which it said reflected “slower progress in reducing costs than expected”.
Scapa also said its industrial revenue, expected to be “slightly” below market expectations at £168m, has a “material” impact on trading profit.
“This is primarily the result of adverse macroeconomic conditions, particularly in the automotive and specialty products markets,” it said.
However, healthcare revenue is expected to be slightly ahead of market expectations, at £139m, an increase from last year, despite losing a contract with medical devices maker ConvaTec Group.
Group revenue will be approximately £306m, in line with expectations.
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Scapa said, going forward, it will “focus on cost reductions” to “drive the margin” in its industrial operations to “historical levels”.
The group said: “We believe that we have the right vision and strategy to capitalize on the outlook and opportunities for healthcare and industrial.
“Our healthcare franchise is well positioned to benefit from the changes in the medical device market and while we expect the macro environment to remain challenging, we will focus on cost reductions to drive the margin in industrial to historical levels.”
It added: “The group is focused on rigorous execution of the strategy as it continues to increase efficiency and convert its pipeline of opportunities to improve sales and margin performance.”
This financial year saw Heejae Chae announce in May 2019 he would step down as chief executive, before retracting his intention the following month “to execute against the current strategy”.
Scapa is due to report its full-year results on May 19.