Van Elle dives after cutting expectations on 'challenging' third quarter

Van Elle Holdings shares plummeted on Wednesday after a “more challenging than expected” third quarter led to warnings of delayed orders and reduced revenue expectations.

The engineering contractor said the causes of the difficulties had been identified and action taken to resolve the issues, including a change of divisional management and the reassessment of second-half workload forecasts after contracts were delayed.

Chief executive Mark Cutler said: "The third quarter has been more challenging than we anticipated, with a disappointing performance in General Piling and several project delays. As a result and despite good momentum being carried in from the first half, we don't believe we will be able to deliver the significant step up in performance during the second half that we anticipated."

The AIM-listed company gave the dire warnings as it reported results for the first half of the year, with revenue of £42.9m, down 18.4% compared to the same period last year, while underlying pre-tax profits almost halved to £2.8m in the six months ended 31 October.

Cutler, who started work last August, said it was "a transitional year" for the business and since his arrival has been undertaking a full review of the business. "As part of this process I have been taking action to refine the group's commercial approach, streamline operations, strengthen the leadership team and re-focus on our key customers," he said.

The orderbook at the start of January is at similar levels to last year and the Cutler continues to expect fourth-quarter activity to be strong despite contract start date delays.

In response to Van Elle’s statement, broker Peel Hunt cut its full-year profit before tax forecast for 2019 by 30%, while expectations for 2020 and 2021 were cut by 18% and 17% respectively.

Van Elle’s shares were down 30% at 55.56p by 1145 GMT.