Shares of Linlithgow-based telecoms testing and measurement firm Calnex Solutions plc fell about 33% after it published a “strong” update on the company’s trading performance for the financial year ending March 31, 2023, but added a cautious outlook for the following year.
Calnex warned that some of its customers are currently taking a more cautious approach to investment decisions, so the firm believes that its financial performance in FY24 will be below that achieved in FY23.
Calnex customers include BT, China Mobile, NTT, Ericsson, Nokia, Intel, Qualcomm, IBM and Meta.
Calnex said: “The company entered the second half of FY23 with a strong order book and successful conversion and delivery has led to the anticipated improved performance in H2.
“Good progress has been made in developing business in the data-centre sector and the integration of iTrinegy has gone well, opening up opportunities in the applications testing sector.
“As a result, the board is pleased to confirm that it expects a strong financial performance in FY23, in line with market expectations and delivering double digit growth across revenue and profits.”
However, the Linlithgow firm added an outlook for the following year to March 31, 2024, that said: “The macroeconomic outlook remains challenging, with growth slowing across the globe.
“Telecoms sector participants, including global equipment manufacturers, have been adversely impacted, with many recently reporting a general softening of demand for their products and services in the short-term, albeit noting that the long-term structural growth drivers remain strong.
“In response to the macro environment, some of Calnex’s customers are currently taking a more cautious approach to investment decisions until there is better visibility on their project development timelines.
“Whilst these customers remain committed to the delivery of projects which will rely on Calnex’s test instrumentation and solutions, the timing of these orders is less certain and market-driven delays are likely to have an impact on the group’s performance in FY24.
“Based on short-term order run-rates, the board believes that the financial performance in FY24 will be below that achieved in FY23, with the company’s revenues more heavily weighted to H2 of FY24.
“The board is confident that, as the industry spending cycle normalises, the company will see an uplift in orders from the current, more subdued, levels.
“Calnex remains well placed to capitalise on the underlying long-term growth drivers in the telecoms and cloud computing markets and the company will provide an update on prospects for FY24 when the Preliminary Results for FY23 are announced in May 2023.”
Calnex CEO Tommy Cook said: “We are pleased to anticipate delivering financial results for FY23 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.
“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.”