Here we go again, another profit warning from commodities and energy risk, trading and settlements solutions supplier Brady (BRY:AIM). And it's a bad one for two reasons, one debatable, one not unreasonable. The company tells us that revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) for 2015 will be 'materially below market expectations.'
This brings us to us the not unreasonable of the issues. Commodity markets have been god-awful for most of this year, trying to win new business was always going to be tough in these markets. New contracts tend to be chunky but incredibly difficult to time, hence that wins moving to the right has been a fairly frequent mantra for the business.
'Many would not blame the management team for struggling against such strong market headwinds,' agrees Megabuyte's chief analyst Ian Spence this morning.
But cutting to the chase, what's really got investors mad is the timing of the announcement, put out at 5.47pm on Monday and after the market closed. This is the debatable bit. 'To try and sneak it [the announcement] out after the market has closed is considered one of the lowest quality things a company can do from an investor relations perspective and, ultimately, will do nothing to moderate the impact of the warning.' Harsh words from analyst Spence.
If there is a but it is to ask what would have been the optimal way to handle the situation? Had it waited until 7am this morning, might critics have lined up against Brady, claiming that it' had sat on market sensitive information for too long? Perhaps. By getting the news out after hours yesterday, investors have a full evening in order to digest the impact of the news.
The market is clearly in unforgiving mood, siding with Ian Spence's criticism, smashing the stock price in half. The shares have been cut by 39p on Tuesday to 38p. Just six months ago the shares were trading at 107p. Maybe we should adopt the American route, release all market news post the 4.30pm stock market close, I'm sure many of the City's number crunchers would appreciate the extra time to examine statements and reassess earnings forecasts.