- Solid State (SOLI), the AIM listed manufacturer of computing, power and communications products, and value added distributor of electronic components has warned problems in its Communications business will impact margins in both its March 2018 and March 2019 financial years.

Group profit before tax for the March 2018 financial year will be in line with market consensus forecast at approximately £3 million. Year on year group revenue is expected to be slightly ahead of expectations at in excess of £45.5 million, close to 15% growth (2017: £40.0m).

The Distribution & value added services division posted growth of close to 18%, and the Manufacturing division has delivered in excess of 10% increase in reported revenues.

Product line margins have been maintained, however as reported at the half year, the customer and product mix in any period ultimately determines the overall group gross margin, which, in this period, will show a reduction on the comparative period.

At its interim report in October 2017, the company reported that the lead time to win new business within its Communications business unit had been longer than expected. This trend has continued in the second half.

A significant proportion of sales in the Communication business unit are export. Securing overseas opportunities is proving harder than anticipated; particularly in North America where it appears domestic suppliers are being preferred on contract awards. As a result of these factors Solid State is reducing expectations for the Communications business unit for the March 2019 financial year, which will have a negative impact on margin mix for the group in the financial year.

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