Despite its best efforts to accentuate the positive, specialty chemicals outfit Carclo (CAR) plunges 25.8% to 133.5p after the group's trading update reveals a sharp drop in sales prices achieved for its Atmel-partnered touch screen technology.
The £86 million cap is now trading at a 12-month low after the group tells investors 'the market for touch sensors is proving to be more competitive than was initially expected and selling prices have continued to decline to approximately half of prior-year levels.'
The recent news that specialty glass and ceramics manufacturer Corning is collaborating with US touchscreen chipmaker Atmel (ATML:NDQ) to develop ultra-thin capacitive touchscreens failed to offset the market's ire. Building volumes at Carclo's Conductive Inkjet Technology's (CIT) business has been more difficult than expected with partner Atmel confirming that several anticipated programs have not yet been awarded.
That notwithstanding, Carclo maintains 'that volume growth, tempered by the effect of lower prices, will give a modest overall increase in sales revenue from our CIT Touch materials business for FY2015 versus FY2014.'
Carclo describes itself as ‘a technology-led plastics business with global integrated capabilities and operations’. About two-thirds of revenues hail from the technical plastics division which makes the kind of fine tolerance moulded plastic components used in medical, telecom and electronics products.
The other third of revenues come from the precision products and technologies divisions. The former is a manufacturer of a range of lighting and control systems for the automotive and aerospace industries while the latter is concerned with the development of new technologies and proprietary systems which are expected to underpin growth going forward.
The CIT business has the potential to transform the market for touch-screen phones, tablets and monitors. Via the Atmel partnership, Carclo has developed a way of printing thin metal lines onto a special film. The potential applications for this new technology are numerous but what it will certainly do is to enable future generations of phones and computers to be thinner, more durable and higher resolution. Yet as a result of increasing competition and pricing pressures, broker N+1Singer significantly reduces its expectations for CIT in the 2015 financial year.
Elsewhere in the business, the trading update revealed that Technical Plastics is set to grow well in the new financial year, benefitting particularly from new work at Carclo's US and Czech businesses.
The group's LED Technologies division is expected to see substantial growth from additional supercar lighting programmes with sales and profits likely to be materially higher than in the prior year. Precision Engineering on the the other hand is likely to report a slightly lower level of profitability relative to the prior year in which its aerospace business benefited from one-off higher margin work.