Specialist pumps manufacturer Hayward Tyler (HAYT:AIM) needs a huge second half performance to deliver on investor expectations in its financial year to 31 March 2017.
Shares trade 11.5% lower at 81p today as investors weigh up whether the business can reverse a £5.5m first half operating loss revealed by management today into a full-year profit of £7.2m.
Revenue in the six months to 30 September gained 3% to £22.5m and Hayward's order book improved 33% to £48m from 31 March.
Investors have voted with the feet, selling shares after the update.
Analyst William Game at house broker Cantor Fitzgerald remains reasonably confident the business, founded in 1815, will be able to deliver a decent full-year result.
'As indicated at the time of the 2016 results, profitability is expected to be strongly second half weighted and management confirms that this remains the case,' writes Game in a note today.
'The statement notes that revenue in the first half was £22.5m (2015: £21.8m), which is expected to result in an operating loss of circa £5.5m.
'The group is naturally operationally geared to increasing volumes and a significantly higher order book of £48m at the period end (March 2016: 36.1m) supports the expectation of a strong second half.'
Key risks to the investment case at Hayward include its ability to covert its growing order book into sales, lumpy revenue from original equipment manufacture contracts, currency fluctuations and the company's high profit sensitivity to small declines (or increases) in sales, Game adds.
Hayward is scheduled to report half-year results on 15 November.
