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Synnovia warns profit growth to be restricted by cost pressures, project delays

Tuesday, 19th February 2019
Specialist manufacturer Synnovia said it expected rising annual revenue to be offset by losses from currency hedging, cost pressures and 'minor' delays at its films division.

Trading for the financial year through March was expected to be 'broadly in line' with market expectations, the company added.

'Revenue has continued to grow strongly, but this has not yet translated into the profitability growth that we expected,' Synnovia said.

Bearings sales had grown significantly over recent months, exceeding management's expectations and that growth was expected to continue over the next few months.

Matrix activities continued to make good progress, while mandrel sales had 'recovered somewhat' from a temporary reduction experienced in the second and third quarter of the financial year.

In the films division, Synnovia said it was having a challenging year coping with capacity constraints and challenges integrating three former separate businesses.

'There have been some delays and teething problems with these projects which we expected to be largely complete in the third quarter of the current financial year,' the company said.

'However, most of these projects are now expected to conclude in the fourth quarter.'

'Meanwhile, staff levels and training have been increased, whilst sales conversions have been held back until the capacity is in place. Costs have therefore risen ahead of revenue, negatively impacting profitability.'


At 8:00am: (LON:SYN) share price was -9p at 102p



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