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construction downturn hits Dundee battery firm Axeon
AXEON shares plunged yesterday after the battery maker warned that the effects of a construction slowdown would push a move into profit back at least six months.
The Dundee-based company is developing and manufacturing batteries for electric and hybrid powered vehicles.
But must of its current sales are to the power tool sector, which has been hit by a slowdown in the economy.
Chief executive Hamish GraADVERTISEMENTnt warned yesterday that the firm's largest customer, which represents around a third of Axeon's total sales, had been hit by falling demand.
The customer, who Grant would not name, has been effected by a slowdown in European construction, and Axeon's sales from its power tools business are now expected to be flat in the second half of this year.
Grant said in September that the company's European business was expecting to manufacture around 550,000 power tool packs in the second half. They now expect to manufacture around 350,000.
He said: "It's a pretty significant slowdown and that's why we've stuck our hand up quickly, because there's no way that we'll make the analyst guidance this year."
Axeon had been expected to report its maiden profit in the second half of 2008, but this has now been pushed back into 2009.
Grant said the company was in a period of uncertainty for the sector but warned the softening demand – which will see expected growth cut rather than an overall fall – could last several years.
"Our understanding is that there's been a general slowdown in construction in Europe, and that is likely to continue for some time in the future."
Shares plunged on the news, closing down 9p at 24.5p, a record low.
The news came as Axeon reported £1.1 million pre-tax loss in the six months to 30 June, an increase of £600,000 over the first half of 2007, as the company increased its research and development spend.
Revenue leapt to £32.9m during the period compared to £2.5m last year, a result of the acquisition of the power tool business, Ristma, and the start of volume production in the automotive sector.
Grant said that outside the power tool sector, Axeon is making rapid progress, with its mobility sector securing an additional £1.6m in orders since the end of June, while its automotive sector has begun manufacturing batteries for small deliver trucks and hybrid powered taxis.
During the first half Axeon delivered 12 prototype batteries to nine automotive customers for testing. Recently the company supplied a battery pack for an electric sports car concept for a German manufacturer, which may be brought into production.
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