(Reuters) - British telecoms testing services provider Spirent Communications (LON:SPT) warned of lower annual profit on Wednesday, saying the telecommunications market was "extremely challenged at this time" and Chinese spending had reduced.
Shares in the London-listed company sank as much as 33% to its lowest since February 2018 as it also forecast a 20% fall in annual revenue, with demand for high-speed Ethernet particularly challenged in the third quarter.
"A strong pick up in orders from China was expected and this did not materialise as the Chinese Government reduced its spending plans and the general economic landscape there deteriorated," it said in a statement.
Spirent said its largest customers were delaying spending and technology investment, leading it to cut its outlook for the near term because negative operating leverage would impact operating profit for the year "very materially". It did not provide specific guidance.
"A slow summer and disappointing September meant that we fell materially short of our expectations for the third quarter," CEO Eric Updyke said in a statement.
The company, which operates in more than 50 markets globally, said China represented a large proportion of the revenue that it no longer expected to receive this financial year.
China accounted for about 18% of its revenue in 2022.
Spirent said previously it was compensating for the "turbulence" in the geopolitical landscape in China by developing new market opportunities in the Asia-Pacific region.
"We expect a meaningful recovery in orders and sales at some point, though there is no visibility on its timing" analysts at Jefferies wrote in a note.