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Scapa shares tumble after profit warning

By Michele Maatouk

Date: Wednesday 12 Feb 2020

(Sharecast News) - Scapa shares tumbled on Wednesday after it warned that full-year trading profit would be "significantly" below consensus views as cost reductions take longer than expected.
In an update on current trading ahead of its financial year-end on 31 March, the company, which makes industrial adhesives, said FY20 revenue is expected to be broadly in line with market expectations at about ?306m. However, trading profit will be approximately ?28m, which is "significantly" lower than consensus.

Revenue from the healthcare division is estimated at about ?139 million, slightly ahead of market expectations and higher than last year despite the loss of the ConvaTec contract. Healthcare trading profit, meanwhile, is set to miss consensus due to slower progress in reducing costs than expected at the time of the interim results.

"The group continues to focus on our pipeline of new programs as we leverage our technologies and capabilities to drive our organic growth and reduce the cost of operations," it said.

Industrial revenue will be about ?168 million, Scapa said, which is slightly below market expectations but has a "material" impact on group trading profit. "This is primarily the result of adverse macroeconomic conditions, particularly in the automotive and specialty products markets," it said.

Scapa said it expects the macroeconomic environment to remain "challenging" in some of the industrial markets in which it operates.

"We will focus on cost reductions to drive the margin in Industrial to historical levels," it added.

At 0910 GMT, the shares were down 36% at 174.78p.


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