Energis stock dives 20% after warning on sales

Energis became the latest telecoms firm to upset the market yesterday when it warned that sales in the first six months might miss expectations. Its shares closed down 20 per cent.

"As you will be aware from what you hear and read, the wider market outlook has deteriorated. Energis is not immune to the pressures affecting other players in the telecom and e-business solutions marketplace," said Gordon Owen, Energis' chairman, at the company's annual meeting.

He said Energis' revenue growth during the first half "may not be as strong as we had expected", but added he still expected profits to improve even after accounting for the cost of integrating acquisitions.

Mr Owen insisted he expected "strong" profit growth in the second half and remained "confident"the company would deliver another 12 months of strong revenue growth and that underlying profits would be in line with expectations. Energis was benefiting from its focus on higher value work, he said.

While most analysts left their profit forecasts for Energis unchanged, they were sceptical that the company would avoid further disappointment.

Kevin Fogarty, an analyst at Teather & Greenwood, said: "They assume that they'll still hit expectations but they're suffering from order cycles getting longer. If corporate IT spend deteriorates further, then their assumption of second half return to growth evaporates."

Shares in Energis, which closed down 32p at 128p, are now trading at their lowest levels for about three years.

Nevertheless, Energis moved to dispel fears that the setback would have a detrimental impact its business plan. "Energis remains fully funded and well on course to achieve our goal of being Europe's leading e-business and advanced telecom solutions provider," Mr Owen said.

Mr Fogarty said: "I don't believe they have any more visibility than we do and clearly the order cycles are lengthening. The risk profile has been raised quite a bit. They are victims of what is happening in the economic environment and quite clearly management can't do much to change that."