Shares hit as Blackburn firm Promethean predicts operating loss (From Lancashire Telegraph)
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Shares hit as Blackburn firm Promethean predicts operating loss
5:09pm Sunday 1st July 2012 in Blackburn
SHARES in East Lancashire firm Promethean plunged almost 40 per cent after it announced it expects to post an operating loss for the first half of its financial year.
The Blackburn-based supplier of education technology said the seasonal trend in the US of high levels of order activity at the end of June failed to materialise at the levels anticipated.
Revenues for the first half of the year were now expected to be in the range of £80m to £85m and, with gross margins lower than last year, it is anticipated that the group will post a high single digit operating loss for the first half of the year.
In April Promethean stated that it expected market conditions to remain challenging, particularly in the US and Europe, and 2012 revenues to be weighted more heavily to the second half of the year than in 2011.
In a trading update, it said the key buying season from June to September in the US would better and that it remained cautious in its outlook.
Now in a statement the company said: "The third quarter remains a key trading period. However, Promethean considers that market conditions will remain very challenging, and the Board now believes that the results for the year will be significantly below previous expectations. Promethean will therefore continue to align its cost base to these tougher market conditions and this will lead to an exceptional charge in 2012."
The firm, led by chief executive Jean-Yves Charlier, supplies interactive whiteboards and learning software to schools. The US is its largest market, accounting for more than 60 per cent of sales.
The share price fell 39.57 per cent to 21p last Friday.
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Comments (2)
5:57pm Sun 1 Jul 12
burner says...
8:12pm Sun 1 Jul 12
Kevin, Colne says...
In March 2010 the company was brought to the market as an Initial Public Offering – IPO - by Goldman Sachs, JP Morgan Cazenove and Gleacher Shackloc at £2 a share, when conditions were favourable to the sellers.
Now some two years later the shares are about to join the 90% Club (a stock that has lost 90% of its market value).
Throughout this period all but one of the broker analysts covering this stock had given a rating of ‘Buy’, ‘Overweight’ or ‘Hold’. The one analyst to take a contrarian view gave a recommendation of ‘Reduce’. As of today one of the analysts has changed their rating of the stock to a ‘Sell’. In other words: we’ve now closed the stable door after the horse has bolted, and we’ll be putting on a new bolt and varnishing the woodwork for good measure.
At the current level the share might be a Buy or it might be a Sell, who knows? But anyone that followed recommendations to buy at £2 and is now minded to follow a recommendation to sell at 22p is probably feeling a bit sore right now.
I dare bet that a fair few of these bullish recommendations by brokers have been regurgitated by the mainstream media without any further independent thought or analysis, or any mention of the fact that the broker recommending the stock may have been one of the brokers that brought the company to market.
I wish the company well but the situation in the USA is hardly likely to be improving any-day soon.
The issuing by the Company of a trading statement a mere three weeks prior to the posting of final results gives a clue to the gravity of the situation, and reading the latest statement – ‘Promethean will therefore continue to align its cost base to these tougher market conditions and this will lead to an exceptional charge in 2012’ - suggests that more job losses are on the cards; and that is the sort of news that we can well do without.