Solid State - Revenues growing but not profits
Solid State’s pre-close trading update confirms the group is able to deliver good revenue growth without relying on acquisitions. However, it is proving difficult to win communications contracts in the current ‘America first’ environment. Since such contracts typically command much higher margins than other activities, this has depressed FY18 margins to such an extent that management expects FY18 PBT to remain at FY17 levels. After demoting some significant communications prospects to ‘upside’, management expects PBT to decline in FY19 despite continued revenue growth underpinned by a strong order book.Solid State manufactures electronic equipment and distributes electronic components and materials. Co. has two divisions: Distribution, which is a distributor serving the needs of the electronics original equipment manufacturer community in the U.K. and products provided include those for the internet of things, embedded processing, control, wireless and wired communications, power management, and light-emitting diode lighting from manufacturers; and Manufacturing, which is engaged in the design, development and supply of rugged and industrial computers, portable power and energy storage solutions, communication systems, antennas and high bandwidth video transmission products.
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