Titon warns on profits amid 'challenging' trading conditions

By Michele Maatouk

Date: Tuesday 18 Feb 2020

(Sharecast News) - Titon Holdings, an AIM-listed manufacturer and supplier of ventilation systems, and window and door hardware, warned on profits on Tuesday amid ongoing "challenging" trading conditions.
In a statement to be made at the company's annual meeting, executive chairman Keith Ritchie said the political and economic uncertainties seen in the 2020 financial year have continued and trading conditions across its geographies in the first four months of the year have been tougher than anticipated.

As a result, Titon now expects underlying pre-tax profit for the year ending 30 September 2020 to be "materially" below management's expectations.

Richie said sales in the UK ventilation systems business have risen slightly compared to the same period last year, but sales of window and door hardware products have been lower than expected as the UK economy suffered a "very weak" final quarter in 2019 and competition intensified.

"Despite reduced political uncertainty, we have not yet seen any uplift in trading in 2020 following the 2019 General Election and the UK leaving the EU on 31st January 2020," he said.

Ritchie said activity levels in the Korean new-build market have continued to fall as the government there has intervened to slow house price growth by restricting lending. As a result, full-year sales by Titon Korea are expected to be around 10% lower than forecast at the time of the preliminary results in December.

Ventilation systems sales in Europe have been significantly weaker than expected as customers over-stocked last year because of the original Brexit dates and due to the postponement of several projects in Germany. The hardware business in the US is also trading below expected levels, Titon said.

"We are clearly disappointed that current trading has continued to be challenging for the first four months of the financial year, but we have taken steps to manage our cost base by reducing our workforce and continuing to bear down on all costs in the business for the rest of the year. Our financial position remains strong, with net cash balances at the end of January 2020 amounting to ?4.03m," said Ritchie.

At 1000 GMT, the shares were down 15% at 93.45p.


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