Weak revenues and a warning of challenging times ahead send shares in plastic and paperboard packaging manufacturer Robinson (RBN:AIM) tumbling 7.8% to 166p.

The £29.5 million cap, which makes packaging for brands like Olay, Quaker and Saxa, grew revenue by 4% to £29.1 million in 2015, which was below analysts’ expectations of £30.8 million.

Underlying revenue fell by £2.4 million as the group was hit by a fall in the price of resin (its raw material) and the strong Sterling reducing the value of earnings from Madrox, the Polish business it bought in 2014.

ROBINSON - Comparison Line Chart (Rebased to first)

Robinson lost a large contract at the end of 2014, which sent underlying sales volumes in the pre-existing businesses down by 6%.

Pre-tax profit plummeted from £2.4 million to £774,000, primarily because of a £1.7 million exceptional cost it booked on the earn-out consideration for Madrox.

The further earn-out is a result of Madrox outperforming expectations. Group margins were higher than anticipated at 24% while adjusted pre-tax profit of £3.1 million is ahead of FinnCap’s £2.8 million forecast.

FinnCap analyst Raymond Greaves says despite the strong performance from Madrox he is leaving his 2016 and 2017 profit forecasts unchanged. Robinson warns that the outlook for 2016 looks challenging particularly for major brands and the UK grocery sector.

‘However, we still see adjusted PBT growing at around 10% due to recent business wins and operational improvement, and we continue to believe the shares offer good value,’ says Greaves.

Issue Date: 18 Mar 2016