Dialight said it has continued to experience production volume shortfalls at its plant in Guadalajara, Mexico.
Following the most recent unexpected update from its manufacturing partner, the Board now believes a significant number of orders are unlikely to be fulfilled in this financial year.
The Company added:
“As a result we now expect EBIT (excluding non-recurring items) for the year ending 31 December 2017 to be not less than £9m (approximately $12 million).
“We expect non-recurring items to be in the region of £6m, and to end the current financial year with a strong net cash position.”
Michael Sutsko, Group Chief Executive, said:
“The performance of our manufacturing partner is a significant disappointment. The challenges are a concern in the short-term but we remain confident in our ability to address these in the coming months. The sustainability benefits of our products coupled with reduced maintenance and improved safety continue to offer real value to our customers. The Board remains confident that the production issues are short term and will not impact the medium to long term growth prospects.”
As a result, research analysts are dropping the Dialight target price. On Friday, December 15, N+1 Singer dropped the Dialight price from $9.56 to $8.48. It also put a “hold” rating on the stock. Analysts Peel Hunt dropped the target price from $9.69 to $7.60.