Two negative announcements late Thursday sending FMS stock down 19%
Its second-quarter sales and profits tumbled, and the U.S. army rejected armored vest samples
A whole weekend intervened between two disappointing announcements from FMS Enterprises Migun (TASE: FMS) and the market's chance to react. But from Thursday, when the company admitted to lousy second-quarter results and to the U.S. army's rejection of sample bullet-proof vests, to Sunday, investors remembered and today the stock is diving 19% on gigantic turnover of NIS 33 million, and that's just in morning trade. The normal volume of trade in FMS is more like NIS 3 million.
FMS had whipped up expectations regarding the American army tender for armored vests, but the samples it delivered for inspection evidently fell short of the army's specifications.
The result will be a delay in final delivery, of two to three months, which will also delay revenue recognition. The contract is worth about $1.3 million a month to FMS. By the first quarter of 2007, FMS projects, it should be back to business as usual.
As for the second quarter, sales sank 25% against the parallel quarter to NIS 73 million, and its net profit retreated by 20% to NIS 9 million. Its margins were not a thing of beauty either.
First-half sales were down 57% year over year to NIS 157 million, and its net profit shrank by half to NIS 31 million.