Engineering group BTR is expected to shift manufacturing to cheaper foreign locations in an attempt to stem falling profits.
Shares in the engineering group dived last week after weaker-than-expected half-time results prompted profit downgrades by analysts.
The firm, which incurred hefty restructuring charges from disposals, said tough trading conditions and the strong pound were to blame for its latest problems.
BTR turned in a £45m loss on turnover of £2,442m, which compares with a £516m profit a year ago.
A large-scale share buyback also failed to rescue the shares from a drubbing on the stock market. They lost 24.5p to close at 107.5p after the results BTR’s lowest closing level for five years.
BTRchief executive Ian Strachan warned that market conditions will continue to deteriorate.
The results mar BTR’s efforts to transform itself into a pure engineering player rather than a wide-ranging conglomerate.
The group said it plans to take fresh action to deal with its difficulties. ‘The results are below expectations but the main shortfall is in businesses being sold,’ said one analyst. ‘The core engineering operations did as expected.’
Strachan declined to spell out what measures he might take, but hinted at possible plant closures.
‘I can’t be specific on closures, but we have to take into account world markets. So if we have excess capacity, we have to address that,’ he said.
Despite BTR’s assurances, analysts were mostly sceptical as to when positive effects from recent cost-cutting measures will feed through to the bottom line. They said plans to move manufacturing production to low-cost locations overseas would take a long time to complete.
Analysts reduced their full-year adjusted pre-tax profit forecasts to between £600 700m, down from £1.29bn last year.