Redditch-based Solid State reports challenging first half
Solid State plc, the Worcestershire-based tech component manufacturer and supplier, said trading in its first half had been "particularly challenging" but that it expects a stronger second half.
In a trading update for the six months to end-September, the Redditch-based firm told investors it had started the second half with a "solid" order book of close to £77 million (m), of which around 65% was expected to be billable this financial year
It added that the group was trading in-line with market expectations for the full year.
In its systems business, the company said political uncertainty in the UK and US had resulted in delays to a number of programmes, contributing to weaker order intake in the first half.
Post-Period end, the division has seen some improvement in order intake in the US, albeit the UK continues to be sluggish, it added.
It comes after the division had seen an "exceptionally strong" start to the prior year, driven by security and defence shipments.
Meanwhile, in components, the market had continued to normalise, said Solid State, with orderbooks adjusting to reflect shorter lead times and unwinding of overstocking.
Political and economic uncertainty has affected most sectors, with some customers delaying orders in response to slower demand, the firm added.
The division expects to report billings of close to £27m for the first half (2023/24: £31.4m). Margins have remained strong and post-period end, the firm had seen an upturn in order intake, particularly in the US, it added.
CEO Gary Marsh said: "Whilst trading in the first half has been particularly challenging and we expect to see this continuing through the second half in some of our markets, our most recent order intake was stronger than any month this year and we believe there are further opportunities in security and defence which can deliver a much stronger second half.
"Furthermore, post the Period-end, we have made two small but strategically important acquisitions which will help to drive our mid-term strategic goals in both divisions. The board is maintaining unchanged market guidance."
Solid State recently announced the acquisitions of Gateway and Q-Par USA, which, it said, complement the development of the US sales channel for the group's own brand products (Durakool, Steatite Antenna and Optical) and will equally drive mid-term operating margin enhancement and organic growth.
The group continues to be cash generative, which underpins the important strategic investments in the period and post-period end in line with net debt expectations, it added.
