Online builders’ merchants CMO Group (LON: CMO) says lower margin sales and stock availability mean that 2022 profit will be lower than expected. There is also a stock revaluation at Total Tiles. The share price fell by 14.5% to 29.5p.
Stock availability concerns mean that orders are taking longer to be filled. There have also been changes in customer buying patterns, according to AIM-quoted CMO. Even so, second half revenue growth is running at 15% or 5% like-for-like.
Human error has caused a miscalculation of stock valuations at Total Tiles and this will lead to a £700,000 reduction in EBITDA due to the overestimation of margins. New procedures have been put in place and a new purchasing team employed.
Underlying EBITDA is expected to be £2.2m – previously it was £3.5m. There should still be a small pre-tax profit and a small net cash position at the end of the year.