LONDON (ShareCast) - (ShareCast News) - Shares in Airea are down more than 12% as its improved first-half pre-tax profit came with news of project delays, input price pressure, demand uncertainty and a rising pension deficit.
Its revenue for the six-month period was £12.8m, from £12.7m, while pre-tax profit rose to £0.84m, from £0.51m.

The maker, marketer and distributor of floor coverings said new product launches targeted at the residential market had driven growth in this sector.

"On the contract side however, delays in projects led to a slow down in growth and as indicated in the annual report sales in the Euro zone took some time to recover," said Airea.

It added that exports grew steadily in the period, and that it was seeing sales ahead of last year as the company entered its second-half.

Airea confirmed investment in new technology during the second half of the last financial year would facilitate the further extension of its product range with several new designs currently being finalised for launch.

"The site consolidation exercise is largely complete with discussions concerning our last leasehold operation in Wakefield reaching an advanced stage," said Airea, noting it continued to benefits from shorter lead times, cost synergies and reduced waste.

"Recent experience suggests that current exchange rate conditions will, in overall terms, prove to be beneficial for the company but in recent months there has been significant input price pressure resulting from commodity price rises," the company said.

"It is therefore difficult at this point in time to predict the longer term effect on our competitive position. As ever our margins remain the subject of careful management as we look to exploit any advantage."

Airea said a far greater concern to it was the medium- to long-term impact of economic uncertainty on market demand. "Our position is not unique of course but there has been a notable increase in volatility in an already cyclical market."

It further noted an increase in the pension deficit of £579,000 resulted from a deterioration in corporate bond yields.

At 11:09 GMT, shares in AIM-quoted Airea were down 12.26% to 34p each.

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