Profitability at Avingtrans will be impacted by the loss of margin resulting from the sale of subsidiary Jena Tec, the company announced in a trading update published on Tuesday morning.
Avingtrans - which manufactures critical components for the global aerospace industry - said that, in the short-term, the margins realised from sales at PFW Farnborough and Aerotech Tubes would not compensate for the loss of margin in respect of Jena Tec.
Sales revenues for this year were expected to be in line with original board expectations, with the loss of revenue replaced by revenue streams from PFW and Aerotech in the second half of the 2013 financial year.
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On November 5th the company announced the sale of Jena Tec, its industrial division, for a cash consideration of £13.45m and set out a strategy focused on the Group's two core divisions: Aerospace and Energy & Medical.
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In line with this strategy, the company subsequently announced the acquisitions of certain assets of PFW Farnborough for £1.85m and Aerotech Tubes for £2m.
The group will realise an exceptional profit in respect of the disposal of Jena Tec of approximately £8m and will incur exceptional costs of £0.35m linked to the acquisitions of PFW and Aerotech.
The company's trading update stated that the sale of Jena Tec, and the subsequent acquisitions described above, had provided Avingtrans with a more focused business and a stronger balance sheet which would enable it to invest in each of the businesses and pursue opportunities which it would otherwise have been unable to target.
Group cautiously optimistic about 2014 financial year
The group is confident that it will see both revenue and margin improvement during the 2014 financial year, which will deliver results marginally above previous board expectations. Coupled with an improved and more robust balance sheet, the Board believes that the recent transformational transactions place the Group in a much stronger position for the future, both financially and strategically.
Interim dividend to be reinstated
The board expects to reinstate an interim dividend of 0.7p when the company announces its results for the six months ended November 30th 2012.
The group's share price jumped sharply in November from 88p to 102p following a period of relatively flat trading through much of August, September and October.
Avingtrans' share price was down 7.28% to 95.50p at 10:06 on Tuesday morning.
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