Metalrax had a mixed first half, largely down to problems at its consumer durables division. Inconsistent demand makes predictions tricky, but management thinks growth this year is unlikely. That dashes our hopes that Metalrax will beat the City's earnings forecasts, removing a key reason for buying the shares.
Analysts are understandably disappointed. Broker Arden Partners, which advises Metalrax, had pencilled in an extra £0.5m of operating profit for 2012, but now expects just £2.3m, less than last year. Metalrax blames the recession. It has made life “very challenging” for George Wilkinson, part of the consumer durables business that sells bakeware, wine racks and other kitchen gadgets to John Lewis, Ikea and Dunelm. As a result, Metalrax's bosses can't forecast how orders will turn out, though much will depend on the crucial Christmas period.
Still, business is better at the core specialist engineering unit. Slower growth in China has been a worry, but there has been good demand for parts from JCB and Caterpillar, and from car maker such as Jaguar and Land Rover.
