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Kromek issues profits warning amid contract delays
Updated 11:30am Friday 28th March 2014 in Business
A NORTH-EAST imaging specialist has warned that revenues are expected to come in well below expectations due to delays for a large number of contracts, and therefore it no longer expects to be profitable this year.
Despite strong revenue growth year-on-year, Kromek said the shortfall for the year is due to a delay in a number of large contracts.
The supplier of radiation technology to the medical, security and nuclear markets said it had been hit by delayed orders from UK and US government programmes, from the Japanese nuclear detection products market, and delays to large orders in the medical and security markets.
Furthermore it has taken the Sedgefield, County Durham firm, which listed on the AIM stock market last October, longer than expected to set up distribution channels for nuclear radiation products, which are now in place in many of its important markets, and more work is ongoing to widen the channels through the expansion of its commercial teams.
Arnab Basu, the chief executive of Kromek said: "I am disappointed that we will not meet market expectations but I am confident that we will harvest real value from our technology going forward.
"The build up of our sales and marketing resources since the IPO has been slower than expected which has also been a contributory factor in the shortfall. We have executed important commercial deals during the year and achieved significant technical developments which will lead to a much wider adoption of our products in our target markets.
"The demand, both for using our technology as a component and for our products remains strong and I am confident that we will continue to add substantially to our order book in the months ahead and realise value for our shareholders in the years that follow.”
Kromek Chairman, Richard Morgan, said: “The management team have demonstrated their ability to rapidly grow the business and yet I know they are disappointed that growth will be slower than they had forecast.
"The Board is confident in the medium term prospects for Kromek and the recent advances in our technology development only add to the already substantial market opportunities to create a technology leader and a profitable and valuable business.”