- Shares in the building materials supplier fell by 12.7% to 24p by early afternoon
- The firm now anticipates reporting adjusted earnings before nasties of c.£1m
- Trading has slowed significantly ever since lockdown restrictions were ended
CMO Group shares plunged on Monday after the building materials supplier warned of weaker-than-expected annual profits.
Shares in the online-only building materials supplier fell by 12.7 per cent to 24p by early afternoon, making them one of the AIM All-Share Index’s worst performers.
The Plymouth-based firm now anticipates reporting adjusted earnings before nasties of around £1million for 2023, compared to prior guidance of £2.5million and less than half the £2.1million made in the prior 12 months.
Outlook: CMO Group shares plunged on Monday after the firm warned of lower yearly profits
At the same time, it forecasts annual turnover will be 14 per cent down at about £71.5million due to continued economic uncertainty.
CMO noted average orders during late 2023 were ‘lower than normal’ as customers transitioned towards smaller building and repair projects.
Like other construction businesses, CMO benefited from a surge in orders during the early part of the Covid-19 pandemic when cooped-up Britons used some of their extra savings to complete domestic renovations.
Demand further benefited from home-movers seeking more spacious places to live, record low interest rates and the introduction of a stamp duty holiday.
In July 2021, CMO raised £45million after listing on the London Stock Exchange, with the money intended to be spent on lowering debts, buying companies and boosting its ranges.
Yet trading has slowed since lockdown restrictions ended, building material costs soared and the Bank of England’s 14 successive base rate hikes increased mortgage costs.
Construction activity has fallen for the past four months, according to the S&P Global/CIPS construction purchasing managers’ index, which showed a reading of 46.8 for December. Any figure below 50 indicates contraction.
CMO’s shares have plunged by 82 per cent in value from their initial public offering price of £1.32.
‘With macro-economic headwinds continuing to impact the construction sector, we proceed with caution for the outlook for FY24,’ said its chief executive, Dean Murray.
Nonetheless, CMO noted it delivered on numerous strategic priorities, including higher product margins, improved carriage costs, and growing market share at its superstores.
Founded in 2008 as Construction Materials Online, the company offers more than 130,000 products through its portfolio of specialist websites.
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