Proactive Investors - Midwich Group PLC (LON:MIDWM) shares fell 17% to 265p as the audio-visual products consultancy said market conditions have not improved as it hoped, and that investments made in the business will result in profits being "significantly below" last year.
Having in its interim results last month highlighted market data pointing to a return to growth for the second half, the AIM 100-constituent hailed the UK market having "stabilised" in recent weeks and performance "remained strong" in both North America and live events and entertainment sectors.
However, market conditions more broadly have not improved as anticipated, with Germany singled out as having deterioration, primarily in the education and corporate markets.
Given this, revenue for the calendar year is expected to be marginally ahead of the prior year, while full-year gross margins are anticipated as being in line with the record levels achieved in the first half.
Midwich said the cost-cutting programme flagged at its interims is "well progressed", adjusted operating profit to be significantly below the prior year, which it said reflected the operational gearing of the business.
Three small specialist acquisitions in the UK have been completed for a combined £12 million in cash, adding higher-margin technical businesses operating primarily in the live events and fire security markets.
Debt leverage is expected to be around 2.2 times adjusted EBITDA at year-end, which the group said it "well within" its debt covenant levels.