HeiQ PLC on Wednesday said sales in the fourth quarter of 2022 were impacted by a ‘significant’ deterioration in consumer demand as a result of worsening macroeconomic conditions.

Shares were down 53% at 26.00 pence each on Wednesday morning in London.

The London-based textiles technology firm said this reduction in sales has also been compounded by brands increasing their levels of inventory to all-time highs after the pandemic, due to persisting supply chain concerns.

Consequently, HeiQ’s customer base had around 70% less demand in the final quarter of 2022. Sales in China especially suffered due to pandemic related lockdowns.

It added that brands have become more hesitant to invest in innovations at this particular time.

HeiQ now expects revenue for the year to be 20% below market expectations at between $54 million and $55 million. The firm’s pretax loss is expected between $2.5 million and $3.5 million.

The industry expects global markets to continue to experience low demand for at least another six to nine months. The company also expects trading for financial 2023 to be below market guidance, with anticipated sales and gross margins maintained at financial 2022 levels.

It added that given the macroeconomic headwinds, the company has started to implement cost savings and will continue to review and adapt its cost basis with the objective of returning to profit before tax in financial 2023.

Additionally, HeiQ said its subsidiary HeiQ Materials AG has signed a deal to buy the entire issued share capital of Tarn-Pure, a UK-based intellectual property company holding critical EU and UK regulatory registrations to sell elemental copper and elemental silver for use in disinfecting hygiene applications.

HeiQ said it will pay its vendors a consideration of about £850,000, subject to adjustments for cash, working capital and debt positions as of closing date.

Tarn-Pure expects to report total revenues of approximately $400,000 for financial 2022, which are mostly derived from royalty sales.

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