Engineer Hayward Tyler (HAYT) warns that delays in securing contracts worth £30m will hit revenue for the year to 31 March. The orders cover both its electric motors and steam turbine business, the latter under the Peter Brotherhood brand.
The company now expects revenue of between £60m and £65m for the full year. Forecasts had been anticipating upwards of £80m.
Shares warned in October that the firm needed a strong performance in its second half to meet investor expectations.
Management anticipates earnings before interest, tax, depreciation and amortisation (EBITDA) of £4m to £5m in the second half of 2017.
That would imply no better than breakeven for the full year on the EBITDA line, versus original expectations of a £10.3m positive outcome.
FinnCap analyst David Buxton says that breakeven EBITDA implies an adjusted pre-tax loss of approximately £4m, a massive blow given the £6.3m pre-tax profit that had been expected this year.
The relatively modest slump in the share price today - down 7% at 45p - suggests that investors are not surprised by the firm’s inability to deliver.
There is also plenty of doubt about what investors can expect going forward, despite the company's £52.2m order book. FinnCap has ominously placed its forecasts for the next year, to 31 March 2018, under review.
Investors should also be wary of Hayward’s current balance sheet weakness. A £2.4m loan from Royal Bank of Scotland (RBS) is due for repayment by 28 February, suggesting that another debt renegotiation will be needed or a fund raising.
A brave 6.5% personal stake built up by Baillie Gifford fund manager Richard Sneller in November, worth £3.1m at the time, has not paid off to date. The shares have since nearly halved.
