Shares in packaging group MPAC (MPAC) hit a two-year low after the firm warned of an ‘uncertain’ FY outlook. While the group stuck to its guidance, it admitted predicting the timing of customer orders had become ‘difficult’.
Order flow slowed
MPAC, which manufactures automated packaging machinery, posted solid FY25 results with a 42% jump in revenue. Orders rose 25% to £151 million, but the closing order book was only £90 million, down 24% on FY24.
The firm said FY26 results would be H2 weighted, as in previous years. However, given ‘increasingly uncertain market conditions’ it can’t assess the timing of customer capex decisions.
While two thirds of FY26 revenue is currently covered, the order book hasn’t increased as expected. Service revenue continues to flow, but it is typically short cycle and represents less than 25% of annual income.
The firm said due to lower market volumes, price competition for OE orders had increased, putting pressure on gross margins. It has mitigated this so far by cost reductions completed in FY25 and actions taken in Q1 2026.
The group is focusing on managing its net debt, aided by the prospect pipeline and ongoing cost management and cash collection. However, movements in working capital and net debt are strongly influenced by the timing of OE order intake.
We can chalk this up as another warning, albeit heavily veiled, due to the Middle East crisis. When companies get nervous, they delay or cancel orders, which has a domino effect on their suppliers.
For now, the market is shrugging off this growing evidence of a slowdown in corporate activity. Make no mistake though, more companies will warn so make sure your portfolio is resilient for this next phase.
Read the press release here: https://mpac-group.com/investor-centre/
