Security and surveillance solutions company Synectics (SNX:AIM) slumped after warning some energy sector customers have delayed project decisions.
Synectics’ board currently expects to meet FY26 consensus expectations. However, this is ‘subject to energy sector activity normalising through H2’.
Investors were also disappointed by the news Bob Holt is stepping down as non-executive chairman.
Holt supported the establishment of Synectics’ new growth strategy. But he needs to spend more time driving the growth of EARNZ (EARN:AIM), the energy services minnow he chairs as a significant shareholder.
Much to do in H2
Against a backdrop of geopolitical uncertainty, some energy sector customers have delayed project and infrastructure investment decisions, said Sheffield-based Synectics.
Although the scale of these opportunities remain unchanged, the timing of certain contract awards and project activity in this industry is ‘unclear at this stage’.
Synectics’ was at pains to point out that its sales and profits have historically been H2-weighted. Yet the revelation of an energy sector slowdown still gave investors the jitters. A lot needs to go right in H2 for Synectics to meet FY26 market expectations. Consensus calls for sales of £62 million and £4.1 million of adjusted EBITDA.
Positives elsewhere
The energy sector slowdown overshadowed news that ‘positive activity has continued’ across other core markets in the first five months of FY26.
In the leisure and hospitality sector, Synectics has seen ‘strong order intake in the North American gaming market’. The company recently clinched its largest contract win to date in Canada, with its surveillance solution selected for a casino and resort in Ontario.
Synectics has also bagged additional contracts across its critical infrastructure, public space and transport sectors.
What did the CEO say?
CEO Amanda Larnder said: ‘Management continues to closely monitor the current geopolitical backdrop particularly given the company’s exposure to the energy sector. Whilst the timing of some customer investment decisions and contract awards is currently uncertain, our underlying new business pipeline remains encouraging.’
Larnder added: ‘We have made clear progress in reshaping the business, with early signs that these initiatives are already supporting improved commercial execution, including better customer engagement and more efficient delivery. We are focused on delivering a more scalable, repeatable model that can support stronger and more consistent growth over time.’
There is much to admire about Synectics, whose capabilities go far beyond traditional CCTV. In an increasingly connected world faced with growing geopolitical uncertainty, the company helps critical industries to stay ahead of threats. Synectics delivers intelligent, cyber-secure surveillance solutions that enable clients to protect their people, infrastructure, and operations.
This dividend-paying UK technology firm has made good progress with its strategic transformation and boasts a debt-free balance sheet.
And yet, with projects in the energy sector being pushed to the right, there is a good chance Synectics will need to downgrade guidance in the months ahead. Avoid for now.
Read the press release here: https://synecticsplc.com/investors
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