30 October 2019 – trading update

A trading update has warned that the Engineering sector is set to deliver a full year adjusted operating loss of approximately £1.5m.  Due to this further deterioration in trading, a material restructuring of the UK Engineering business is underway.  This should be completed before the next scheduled trading update in January.  The impact of Brexit has increased in the second half and with the decision to delay Brexit again, further months of related uncertainty are likely in the UK.  The German automotive sector slowdown has continued to impact on European operations.  Full year adjusted profit before tax is now expected to be at least £9m.  Significant actions have been taken in the impacted businesses in the UK and Germany to reduce the cost base.  The full benefit of this is expected to come through in 2020.  The shares trade on a low multiple of prospective earnings and we feel that there is scope for significant capital growth over the longer term.  BUY.