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18 Sep 2018 | 08:34

Flowtech Fluidpower's warns on profits despite upbeat H1 results; CEO to retire

Technical products supplier Flowtech Fluidpower said chief executive Sean Fennon was retiring and warned operating profits would be below market expectations for the full year, despite reporting growth in first-half profits and revenues.

Fennon would be replaced by Chief Financial Officer, Bryce Brooks.

Underlying operating profit would be marginally below market expectations for the year ending 31 December 2018, owing to delays in the Thames Tideway project, which led to discussions concerning potential revisions in both contract terms and pricing.

For the six months to 30 June, profit before tax rose 33% to £4.15m from £3.11m a year earlier and revenue 65.1% to £56.42m.

Overall gross margin increased year on year by 2% to 36.1%.

The strong uptick in revenue was led by a 127.9% jump in the company's power motion control division revenue and a 86.9% in process division revenue.

Revenue growth was also bolstered by the completion of four acquisitions last year - Hi-Power, Orange County, Hydroflex Hydraulics and Group HES - and more recently in March 2018, Beaumanor Fluidpower and Derek Lane & Co, the company said.

The half-year dividend was raised 5.2% to 2.03p a share.

'Our markets have experienced a strong period of growth over 2017 and early 2018, and we have been able to enhance this with our own commercial activities, again bolstered by the benefits from our acquisition programme.'

'Whilst recent trading has remained positive, there are some signs, particularly in some engineering businesses, that growth may be softening,' said Malcolm Diamond, Non-Executive Chairman.

'As such while we remain confident in the prospects for the future growth in both our markets, and the enhancement our coordinated activities will bring, we are cautious about prospects in the short term until clarity is achieved on the post - Brexit UK economy.'

'Beyond this short-term view, the Board remains confident in the overall Group strategy being adopted.' At 8:34am: (LON:FLO) Flowtech Fluidpower Plc share price was -49.5p at 119.5p

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