LONDON (Alliance News) - Engineering and services company Molins PLC Thursday said it swung to a loss in the first half, a performance which was broadly in line with management expectations, although market conditions in the Middle East and Eastern Europe adversely impacted its tobacco machinery division.
The stock was quoted down 18% at 131.10 pence, a new 52-week low.
Milton Keynes-based Molins posted a pretax loss of GBP100,000 for the six months to June 30, compared with a GHBP700,000 profit a year earlier, as revenue slipped to GBP40.0 million from GBP47.8 million.
Molins said its performance in the first half was broadly in line with internal expectations.
However, it said sales from its business that designs, manufactures, markets and services specialist machinery for the tobacco industry dropped to GBP10.0 million from GBP18.0 million a year earlier.
Molins said the tobacco machinery results reflect adverse market conditions in some of its main markets, with the division experiencing reduced order demand and aftermarket activity. In particular two large orders to the Middle East and eastern Europe, which had been expected to have been delivered in the period, were deferred.
On the other hand, the scientific services division saw sales increase to GBP11.7 million from GBP11.4 million. The division develops, supplies and supports process and quality-control instruments and machinery for the tobacco industry and other industrial sectors.
"Sales of process and quality control instruments and machinery grew, with demand remaining strong for quality-control instruments in our major markets and demand for cigarette smoke capture machines ahead of the prior period," Molins said.
Meanwhile, sales at the packaging machinery business grew 9% in local currency, but were impacted by the strength of sterling, resulting in a marginal reduction in sterling terms to GBP18.3 million from GBP18.4 million. The division supplies engineering services and capital equipment through its operations in the UK, the Netherlands, Canada and Singapore.
As in previous year, Molins said its full-year trading performance will be significantly weighted towards the second half.
"The board is mindful of the strength of sterling and current market conditions for the tobacco machinery division," Chief Executive Dick Hunter said in a statement. "The prospects for the scientific services and packaging machinery divisions continue to be encouraging."
In light of its woes, Molins left its interim dividend unchanged at 2.5 pence per share.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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