Shares in fastener maker Trifast plunged more than 17 per cent yesterday after the company posted a fall in first half pretax profits.
Trifast, which employs 70 people in Wednesbury, said profits for the six months to September 30 came in at £2 million, compared to the previous year's figure of £2.8 million.
The firm, which a few months ago snapped up fastener distributor Serco Ryan from Wyko Holdings in an £18 million deal, blamed the fall on higher costs, US interest rates and a weaker performance from some of its key sectors. Trifast also said that trading in October had been disappointing and levels had not recovered this month.
Due to a combination of continued challenging markets and reduced visibility, the outcome for the year as a whole had become "much more difficult to predict," Trifast added.
However, the company also said if market conditions do not deteriorate below those of the first half, it would expect to at least maintain its current momentum.
Trifast, which operates 30 sites in Europe, the Far East and the US, said that although it had not lost customers it had seen clients ordering lower volumes than previously expected, which had offset the benefits of new business wins.
In a joint statement chairman Anthony Allen and chief executive Jim Barker told shareholders: "Directors have recognised that a key challenge is to grow our share of the consolidating UK market more substantially and rapidly than was possible from our historic base.
"The acquisition of Serco Ryan completed in October - post the period end - is key to our delivery of this.
"The Serco Ryan acquisition gives us further scale to compete more effectively in the UK and opens up a number of exciting opportunities for our business globally. We expect to set new standards in the supply of industrial fasteners by harnessing the joint sales and global expertise of the two organisations." The statement adds: "We are at an advanced stage of a thorough review of the activities of the combined business to ensure that the enlarged group delivers what customers require in an efficient and profitable manner.
"The board expects to benefit-from combining the expertise of both management teams and their people and will be working closely to ensure that we create the best operation to deliver the next stage of our growth.
"We have already indicated that the combined business will reflect significant synergies in the first full year of ownership and that overall, after restructuring costs, the acquisition will be earnings enhancing in the financial year ending March 2007. Our current view is that cost savings will exceed our initial estimates."
Serco Ryan operates a 90,000 sq ft central warehouse at Hartlebury, near Kidderminster.
Much of its sales come from the railway and boat-building industries, the general industrial market and the building industy. Its customers include train maker Bombardier, boat-builder Sunseeker, and Solihull-based Aga.