Coronavirus outbreak and suspension of Boeing 737 MAX production casts a shadow over trading at the 600 Group

There have been growing global concerns about the coronavirus, which have caused people to take actions in an attempt to stop it spreading. Picture: PA

The 600 Group PLC, which is a diversified industrial engineering company, has announced a trading update in respect of the current financial year.

In December the group reported that it had been experiencing certain macro-economic and political uncertainties across its end markets, particularly in the Far East and automotive markets, with order intake for the fourth quarter expected to be significantly below originally predicted levels.

The statement added: "Trading conditions have since become more challenging with the combination of the General Motors strike in USA plants at the end of last year and the suspension of manufacture by Boeing of its 737 MAX in January this year further impacting hundreds of thousands of suppliers across our core industrial markets.

"Order intake in both Machine Tools and Industrial Laser Systems therefore remains volatile, including two significant projects that have been pushed into the next financial year."

The statement added: "In addition, the coronavirus is causing disruption to shipping from the Far East. Whilst the group has no significant volume of sales and little direct sourcing from Mainland China, the effect of delays to deliveries is pushing sales past the end of the March financial year."

However, across the UK operations, there continues to be good progress with orders up more than 100 per cent on the prior year.

The group said it was also pleased to report that contracts have been exchanged for the sale of the Gamet Colchester site for $0.5m.

This sale is part of the group's rationalisation of the UK operations of its machine tools division to reduce operational risk and capital expenditure requirements.

Completion is expected in the next few days with the proceeds being used to reduce bank debt, the company said.

The statement added: "As a result of the market volatility described above and the expected resultant shortfall in revenue against a relatively fixed cost base, the out turn for the full year is now expected to be significantly below the board's previously revised expectations.

"Despite these major headwinds, the board continues to believe in the long-term fundamentals of the group, which benefits from a significantly enhanced financial position, and remains optimistic for the future as it continues to pursue its strategy of de-risking and diversifying the business."

The 600 Group PLC is a distributor, designer and manufacturer of industrial products with three principle areas of activities: machine tools, precision engineered components and industrial laser systems.

The Elland-based firm launched a new European Technology Centre last year as the business continues to focus on product innovation.

The new 58,000 sq ft site includes a modern, open plan office environment plus manufacturing and warehousing space.

It also includes a product showroom, demonstration area and customer training centre to showcase the business’ product range.

The company said the move from Heckmondwike marked a step forward for the group as it seeks to create a more flexible platform’ from which to leverage the strength of the group’s brands and grow the business into diversified niche markets internationally.