It now appears that ‘unfavourable market conditions and inflationary cost pressures’ have combined to hit the ‘fast-growing UK floor coverings distributor Likewise Group (LON:LIKE).
In an early Trading Update, Tony Brewer’s group has found it necessary to announce that it is likely to see the 31 December year end results come in at some 2% below market expectations.
Those conditions include ‘the terrible war in Ukraine, political instability in the UK and a particularly hot summer.’
Overall, the net effect of that now seems to be to expect the current year’s figures to come in weaker than previously thought.
Analysts Andy Hanson and Carl Smith at the group’s brokers Zeus Capital expect to see its current year revenues to almost double from £60.5m to £120.0m, while adjusted pre-tax profits could rise from £1.6m to £2.5m, while basic earnings will stand at just 1.0p, with a 0.2p dividend per share.
Looking forward to the coming trading year to end December 2023 the brokers prudently go for £136.6m sales, while profits could hold at around the £2.5m level.
The analysts state that despite the lower profitability in the near-term, they continue to see long-term earnings growth potential as the group continues to expand.
The group, which has a strong balance sheet worth over £40m in net assets, has seen its shares fall back to as low as 13p in reaction to the news, before recovering to trade around the 15.5p level.
At that price the group is only capitalised at £39.0m.
The shares may well gyrate for a short while before picking up again as further expansion shows through.