Genuit warns FY profit will miss market expectations, shares tumble

(Sharecast News) - Genuit tumbled on Tuesday after the provider of sustainable water and climate products warned that full-year profits would miss market expectations amid ongoing challenging market conditions. In an update for the nine months to 30 September, the company said revenue rose 3.5% on the same period a year earlier on a reported basis, to £464.5m, but was down 4.3% on a like-for-like basis.Genuit said this demonstrates "resilience in a market where material volume headwinds have been created by macroeconomic conditions including anticipated interest rate increases".

Revenue in the climate division was up 3.5% to £135.2m on a reported basis, but down 7.2% on a LFL basis, while revenue in the water segment was 4% higher at £328.5m on a reported basis but 3.3% lower on a LFL basis.

Genuit said that since its interim results in August, challenging market conditions have persisted and worsened in some specific markets, namely the heating businesses, due to the unseasonably warm weather and expected interest rate rises.

As a result, it now expects full-year underlying operating profit of around £84m, versus consensus expectations of £91m to £96m.

Chief executive Joe Vorih said: "As highlighted at our interim results in August, we expected challenging market conditions to persist for the rest of the year and that has been the case. While the majority of the group has delivered a resilient performance, conditions have worsened in some specific markets due to unseasonally warm weather and the prevailing economic environment. Against this backdrop, we continue to focus on what we can control, including continued business simplification, cost discipline and the ongoing deployment of the Genuit Business System.

"Looking ahead, whilst we expect challenging conditions to continue into the new year, Genuit remains well-placed in markets with regulatory and sustainability-related growth drivers. Structural tailwinds including the Future Homes Standard, Warm Homes Plan, social housing policies and the AMP8 water spending cycle will increasingly create further opportunities from next year. In addition, simplification initiatives already announced will generate over £4m of operating profit benefit in 2027."

At 0818 BST, the shares were down 15% at 245.80p.

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