Mpac Group shares plummeted 34.5% to 248.9p in late afternoon trading on Monday after the company announced an expected profit significantly below market expectations, as a result of macro-economic volatility and supply chain problems.
The automation solutions firm reported challenges in sourcing critical, customer specified electronic components, with the issues increasing in recent times resulting in extended lead times and cost inflationary pressures, which served to impact Mpac Group’s operational efficiencies and margins.
Mpac Group revealed the challenges were likely to continue for the remainder of 2022 before easing in 2023.
The company said it had implemented a selection of measures to mitigate the problem, including securing alternative sources of electromagnetic component supply, increasing focus on reliable planning data from its recently implemented ERP system, close management of its supply chain and the introduction of cost-saving initiatives.
The firm commented its longer-term outlook remained positive, with a strong prospect pipeline and order book focused on its core, apparently resilient markets of Healthcare and Food and Beverages.
Mpac Group highlighted its balance sheet remained strong, giving it the ability to invest in the company for growth over the medium term and beyond.
”Over the recent past Mpac has created a business model which enables the Group to flex with changing circumstances, however the unprecedented nature of the supply chain disruption will impact our full year results,” said Mpac Group CEO Tony Steels.
“I am confident our experienced management team will resolve the short-term challenges with the mitigation plans already in place, alongside the sound operational foundations established by implementing the One Mpac business model.”
“We remain confident in the long-term prospects for the Group.”
