Why Shares In Dialight plc Plunged

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares in Dialight (LSE: DIA) fell by more than 25% in early trade this morning, following a trading update from the lighting and signals specialist.

So what: Despite industrial lighting sales growing by 50% in the year, management had indicated in its November interim statement that “the precise timing of Industrial Lighting orders remained difficult to predict”, and shareholders’ fears were realised as it was announced today that a late receipt of almost £3m worth of lighting orders will lead to missing previous expectations.

As with so many companies skewed towards retail, the fourth quarter is all-important as it is “seasonally strong”, so the shortfall will be a blow to Dialight. 

Now what: Elsewhere, the company’s shares tailed off towards the end of 2013 as the board revealed that “the performance of our Obstruction business during the year had been affected by the transition in our business model in this market and that this would directly impact Group revenues and profitability compared to 2012″.

However, Dialight holds in a market-leading position and management claims the industrial lighting market continues to be buoyant, and “remains confident of delivering renewed profitable growth in 2014 and beyond”.

Additionally, today’s update revealed that it has concluded positive discussions with Philips to join their LED Luminaire Licensing Programme, which will give access to a broad range of Philips’ Intellectual Property relating to Luminaires.

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> Sam does not own shares in Dialight.