Crisis hits Dialight outlook as Mexican factory shuts
Dialight said the outlook for financial performance was significantly reduced as the company said it had closed its Mexican factory had closed because of Covid-19.
The producer of sustainable industrial LED lighting said orders in the first quarter were in line with expectations until late March when lighting demand weakened. Overall orders in the US increased but business in Europe, the Middle East and Africa took a significant hit.
The components business had "robust" trading with orders for medical equipment parts rising. Dialight said it was working through supply chain challenges to deliver the parts.
Dialight said: "The group faces a background of short-term increased uncertainty and challenges in the global economy. It is thus more difficult to provide guidance on FY2020 performance, but our current expectations for the 2020 half year and 2020 full year have significantly reduced since the time of our 2019 full year results announcement."
The company's shares fell 11.4% to 179.49p at 09:23 BST.
The company said its Mexican manufacturing plant was open until last week but that it had suspended operations after applying to the government to be classed as an essential business during the Covid-19 emergency.
"We believe that a significant proportion of our manufacturing operations should qualify due to the number of critical infrastructure and medical equipment customers we have," Dialight said.
Dialight said its net debt at 20 April was £16.2m, down slightly from £16.5m at the end of December. The group has a £25m revolving credit facility to 2023 with HSBC with a two-year option.
"We are in early stage discussions with HSBC to arrange additional liquidity and covenant headroom, should that be required," the company said.
Dialight said it had scrapped all discretionary spending and paused capital spending on new products. Directors and top executives have taken a 20% pay cut and Chairman David Blood is waiving his pay until the crisis is over. The company has furloughed employees and cut pay for most of its workers.