Titon Holdings warns on FY trading amid margin pressures

Ventilation systems manufacturer Titon Holdings warned on Friday that its full-year trading performance would be weaker than previously expected as a result of both margin pressures and production and despatch issues.

Titon stated trading conditions in the UK and Europe had been affected by shortages of raw materials and components, as well as price increases for materials, components, labour, and energy, resulting in margin erosion from cost inflation.

However, Titon said it will now be putting through "further price increases" before the year-end as part of an effort to mitigate margin impacts from cost increases going forwards.

The AIM-listed group also noted trading had been affected by "unforeseen operational impacts" associated with the implementation of its new internal ERP system for its UK and European operations, with the initial implementation leading to "short-term production and despatch delays", which resulted in lower than expected revenues over the last three months.

Titon added that it had also incurred some increased costs to implement the new ERP system and for system development, as well as increased labour costs to ramp up production output and enhance staff retention.

"The ERP implementation challenges are being resolved and our sales revenues have now returned to more normal monthly levels, but in the current financial year we do not expect sales in the final months of the year to be sufficient to recover the sales shortfall we have suffered. As a result of these items our results for the FY21/22 financial year will be lower than our prior expectations," said Titon.

As of 0920 BST, Titon shares had slumped 10.30% to 74.0p.

Reporting by Iain Gilbert at Sharecast.com