Laird Plc dropped the most on record in London trading after the supplier to Apple pared its outlook, citing “brutal” price competition from Asian parts providers and sluggish demand from the mobile industry.
Laird tumbled as much as 50 percent and was down 49 percent at 149.8 pence, at 9:15 in London.
“The acceleration of production for mobile devices has come much later than in previous cycles and visibility on volumes remains poor,” the company said in a statement. “In addition, we have experienced increased margin pressure due to unprecedented pricing pressures and some operational factors.”
Competitors based in Asia are driving down prices, leading to continuous rounds of negotiations with customers, Chief Executive Officer Tony Quinlan said on a conference call.
The London-based company, which makes materials that protect smartphone parts from heat and interference, predicted annual pretax profit of about 50 million pounds ($61 million) amid a “very challenging trading performance” in its Performance Materials division. That was about 32 percent below the average analyst estimate.
Quinlan declined to name Apple on the call, referring only to the company’s “big customer.” Apple’s website lists Laird as a supplier.
Revenue in the third quarter was up 29 percent to 207 million pounds, but that was lifted by acquisitions and by favorable currency conversion rates after the U.K.’s vote to leave the European Union. On an organic basis at constant rates, sales were down 4 percent.
Former Laird CEO David Lockwood left in August to take the top job at defense contractor Cobham Plc, and he was replaced by Quinlan, the former chief financial officer.
After a weak first half, Laird said it had expected an improvement that did not materialize. Apple said in July that it sold 40.4 million iPhones in the three months ended June 25, down 15 percent from a year earlier and 21 percent from the previous quarter. Rival Samsung has been roiled by problems with its Galaxy Note 7 phone, which it stopped making after a number of the devices caught on fire.
The problem with the Note 7 “hasn’t helped,” Quinlan said, though the impact on Laird has been “relatively” small.