Monday 04 March 2019 10:32 am | Updated: Monday 03 June 2019 1:24 am

Dialight shares up as outlook brightens after outsourcing contract cancelled

Shares in lighting company Dialight soared this morning after analysts said the company is back on track following the cancellation of a failed manufacturing outsourcing contract.

The company’s share price was up as much as ten per cent after analysts said the firm’s financial results, which were published last week, appeared to “draw a line under the unfortunate past.”

The LED lighting specialist cancelled a manufacturing partnership with US firm Sanmina after production challenges forced Dialight to post a profit warning in the second half of 2017.

Analysts at N+1 Singer said on Friday: “Dialight’s full-year 2018 results appear to draw a line under the unfortunate past, with management mapping out an enhanced future as they target larger growth markets with new, tailored products.

“In the meantime, volumes and margins are set to pick up and inefficiencies fall away as production is brought back fully under the company’s control.

“We have altered our full-year 2019 estimate, reflecting a slightly lower starting base, but as the recovery takes hold we expect the shares’ current discount to the industrials sector to come into increasing focus.”

This morning analysts at Peel Hunt added: “Dialight has a plan and it is one of growth. It will cost some money…but would give plenty of upside if it works.”

Last week Dialight chief executive Marty Rapp said: “The most critical issue facing us was the continued inability of our manufacturing partner to achieve adequate production output, resulting in late product deliveries or lost orders.

“The primary focus during the year was improving our service levels, and I am happy to say that at year-end all product assembly was back inhouse and performing as expected.”