Judges Scientific issues profit warning after weak first half

Judges Scientific posted a trading update on its first-half performance on Wednesday, including the first full first-half contribution from Armfield, and the post-acquisition contributions from CoolLED and Dia-Stron, which were acquired in the first quarter of 2016.

The AIM-traded firm said that for the third year in a row, order intake in the first quarter was weak, lasting until the end of May until a healthy rebound with five consecutive weeks of strong bookings narrowing the decline in organic order intake for the first half to just 1.6% below 2015.

It said the organic order book - which excludes the contribution from Armfield and the other recent acquisitions - finished the first half at 10.7 weeks of sales against 11.7 weeks on 30 June 2015 and 11.4 weeks at the start of 2016.

“Following a very strong year in 2015, Armfield experienced low order intake until the end of May and, although it also recovered in June, it is well below the first half of 2015,” Judges’ board said in a statement.

“Management believes that this reduction in orders has been influenced by the weak price of oil and other commodities and their impact on public funding in many developing economies.”

The board said that for the group as a whole, order intake was down 3.4% compared with the first half of 2015, and the order book stood at 10.6 weeks on 30 June.

“The timing of the recovery in order intake prevented the improved bookings from translating into a satisfactory sales performance for the period to 30 June 2016; this was compounded by production issues at one of the companies in our vacuum segment,” the board explained.

“As a consequence revenues, EBIT and earnings per share for the first half will be down on 2015.”

Judges said the recent revival in order intake and the positive impact of weaker sterling post-Brexit gives the board confidence that the second half will produce better results, although it will be difficult to claw back the underperformance of the first half.

“The board now believes that earnings per share for the full year will be substantially below market expectations,” it warned.