Engineering group FKI today warned that its Logistex unit will be hit by US retail concerns, sending shares down 16 per cent.

The company said lost orders would reduce expected sales at FKI Logistex in the second half by 10-15 per cent compared to last year, providing further evidence of the wider impact of weaker US consumer spending.

"Over the last few days, FKI Logistex has been informed by a number of US customers that, due to uncertainty in their end markets, they have decided to defer the placing of orders for warehouse and distribution projects," the company said in a statement to the London Stock Exchange.

The profit warning, only two weeks after the company reported its first half results, sent shares down 12.5 pence, to 65.25 pence.

The firm also said Logistex's operating profit would also be impacted by the reduced sales and manufacturing activity in the remainder of the year but confirmed that trading in its other operations was in line with expectations and that the company remains well positioned to report strong full-year growth.

FKI's Logistex business makes automated material handling systems used by airports, warehouses and retail distribution centres and reported sales of £372.6 million last year.

At its interim results the company said it still intends to sell its Logistex and Hardware units, but uncertainties in the credit markets and US retail and housing sectors make it difficult to predict a timescale. The company also reiterated Logistex's exposure to the US retail market and said its warehouse and distribution operations could be impacted by any change in activity levels in the sector.

Logistex is FKI's second biggest division behind its Lifting Products and Services unit, which makes wire and wire rope, fittings and lifting products for the construction, mining and the oil and gas industries, with sales of £434.2 million last year.

“In less than two weeks, they’ve gone from a reasonably neutral to positive stance,” Scott Cagehin, an analyst at Numis Securities, told the Reuters news agency. He added that the announcement could weigh heavily on sentiment and expects the shares to be weaker following a recent spike after its better than expected interim results.

In November, the firm reported a slightly higher first-half pre-tax profit of £27.4 million and gave an upbeat full year outlook.

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