ARE.L Share News (ARE)

(Sharecast News) - Arena Events shares plummeted on Thursday after the temporary structures provider lowered earnings expectations due to 'disappointing' operational issues in the UK.The company, which has supplied tents, flooring, temporary seating and other structures for events such as Wimbledon, the Cheltenham Festival, the Super Bowl and the wedding of Prince Harry and Megan Markle, said that adjusted EBITDA for the calendar year is now expected to be between £12m and £12.5m.This is lower than previously indicated due to materially higher incremental costs increases at the UK Structures and Scaffolding division as it experienced "operational issues" in new and one-off projects and the costs associated with them, plus a delay in gleaning the full benefits of the planned integration of three UK warehouses.These operational issues are being addressed, the company said, with a number of senior management changes made within the division, but this could not prevent a material reduction in the overall profitability of the UK division.The AIM traded company is considering moving its financial year end in order to achieve a "more balanced split" as the final quarter of the year is normally its most significant for earnings.Elsewhere, the US division exceeded expectations after the integration and strong performance of the Stuart Rentals acquisition, while the Middle East unit performed in line with expectations after the October acquisition of TGP.Chief executive Greg Lawless said: "Whilst the operational issues in the UK division are clearly disappointing, we remain confident in the group's strategy and long-term prospects and are pleased to announce that we have recently secured contracts for the 2019 Rugby World Cup and the 2020 Olympics which gives the board confidence in the future prospects for the group."Even so, as a result of the impact of the UK operational issues, current economic uncertainty and the timing of a number of large potential one off contracts, Arena said its board is taking a more conservative outlook for 2019.Arena Events' shares, which were priced at 60p for a £20m fundraising in September, were down 31.77% at 39.57p at 0955 GMT.Russ Mould, investment director at AJ Bell, said investors who funded the September capital raising, which was launched to fund acquisitions in California and Dubai, "will be particularly put out since the company's first-half results in September had given little indication that the AIM-quoted company, which also supplies temporary ice-rink facilities, would slip up quite so badly".He added: "Management changes have already been made and Arena's first job is to reassure investors that this is just a blip, and that profit margins can return to previous levels, although its decision to also take a 'more conservative outlook for 2019' may not help here, at least in the short term."If Arena can bounce back quickly, then the shares could recover but investors may take a cautious view."