Roxboro Plc has warned that demand for its Dialight traffic light-emitting diode signal products sharply declined in the third quarter. The market was unable to find solace in the firm’ s conclusion that there was little evidence of an immediate recovery in what has become its core market, and shares plummeted with the announcement of the group’s interim results. By midday yesterday shares at the Newmarket, UK-based specialist components, instrumentation and sensor manufacturer had tumbled 80.5 points at 232.5 pence. Roxboro turned in pre-tax proftis of UKP 8m, down 2% from last time on revenue that rose 20% at UKP 55m, UKP 3m of which derived from acquisitions made during the half. The company said its strong performance had to some extent been masked by three key issues. Firstly, substantial investment in Dialight’s Transport Product Group held back profit growth within the division. Secondly, profits fell at Weston Aerospace due to manufacturing inefficiencies on the introduction of complex new products and Solartron Metrology due to lower volumes. Finally, Roxboro claimed increases of central cost as well as increased interest costs as a result of funding investments and the acquisition of Pressure Systems Inc (CI No 2,843) for about UKP 4.9m. The net result was that operating profits inched up just 3% when compared to last year. Before the additional UKP 1m of start-up costs at Dialight and full provision for the potential increase in the rental of the Farnborough site, Roxboro said the underlying operating profit growth would have been 19%. However, the situation was less gloomy in other areas of business. There had been strong demand for Dialight’s core Electronic Product Group indicator products, said Roxboro, and excellent progress had been made in the new Transport Product Group. Solartron improved performance and strengthened margins. Net debt at the half way stage was UKP 7.6m, compared with a previous cash balance of UKP 6.3m. During the half the Laboratory Instruments group increased sales into Japan by 20%, and Dialight Transport was awarded an initial contract worth UKP 1.5m to replace incandescent light sources in red traffic lights in the state of New Jersey. Despite the continuing strength in the group’s other businesses, the board said it is cautious about prospects for the second half. It is to continue investment in starting up the new Transport product area, but expects second half profits to be similar to the first six months. To reflect the group’s confidence in the underlying strength of the business, an interim dividend of 2.2 pence, up 10% on last time, will be paid.
