Calnex shares slide as it warns of global slowdown

The AIM-traded company reported solid revenue and profit performance in its second half, with the results expected to be in line with market expectations.

It said it expected a strong financial performance for the 2024 financial year, delivering double digit growth across revenue and profits.

Good progress was made in developing business in the data-centre sector, while the integration of iTrinegy had reportedly gone well, opening opportunities in the applications testing sector for Calnex.

However, the board said the global macroeconomic outlook remained challenging, with growth slowing across its markets.

Telecom sector participants, including global equipment manufacturers, had been adversely impacted, with many recently reporting a general softening of demand for products and services in the short-term, although noting that long-term structural growth drivers remained strong.

In response to the general sentiment, Calnex said some of its customers were currently taking a “more cautious approach” to investment decisions until there was better visibility on project development timelines.

While those customers remained committed to the delivery of projects which would rely on Calnex's test instrumentation and solutions, the timing of the orders was less certain, and market-driven delays were likely to have an impact on the group's performance in the 2024 financial year.

Based on short-term order run-rates, the directors said they believed the financial performance in 2034 would be below that achieved in 2023, with the company's revenues more heavily weighted to the second half of 2024.

The board said it was confident that, as the industry spending cycle normalised, the firm would see an uplift in orders from the current, more subdued, levels.

Calnex said it remained “well-placed” to capitalise on the underlying long-term growth drivers in the telecoms and cloud computing markets.

“We are pleased to anticipate delivering financial results for 2023 in line with market expectations, with this solid performance demonstrating the positive response from customers to our expanding product set and our ability to successfully navigate the supply chain challenges,” said chief executive officer Tommy Cook.

“While the global macroenvironment is influencing order growth in the short-term, our expanded offering and strong financial footing mean we are well-placed to return to a growth trajectory once market confidence returns.”

Calnex said it would provide an update on its prospects for 2024 when it announces its preliminary results for the 2023 financial year in May.

At the close on Tuesday, shares in Calnex Solutions were down 31.58% at 117p.

Reporting by Josh White for Sharecast.com.