Mpac Group (MPAC) shares tumbled on Monday after the packaging and automation specialist warned that annual profits will fall well short of market expectations, highlighting ongoing pressure from cautious customers, lower volumes and intense competition.
The stock closed down 18.6% at 213.57p after falling as much as 24% earlier in the session, as investors reacted to a trading update that pointed to a significantly weaker earnings performance in 2026.
Mpac said delays in customer investment decisions continue to weigh on trading, while competitive pricing pressure and lower operational leverage have squeezed margins. As a result, first-half profitability is expected to come in below last year’s level, with full-year underlying pretax profit now forecast to be “substantially below” current market expectations on a like-for-like basis.
The warning marks a sharp setback for a business that reported underlying pretax profit of £13.5 million and an underlying net margin of 10.4% in 2025.
Analysts moved quickly to cut forecasts. Panmure Liberum reduced its 2026 adjusted pretax profit estimate by 43% to £8.5 million from £15.0 million, while its 2027 forecast was lowered by 32% to £11.4 million from £16.9 million. The broker also cut its target price to 350p from 550p, although it retained a ‘buy’ rating.
In response to softer market conditions, Mpac has introduced additional measures aimed at increasing volumes, reducing overhead costs, improving cash generation and aligning capacity with current demand levels.
Despite the challenging backdrop, the company reported an improved order book of £98.8 million at the end of May, up from £90.0 million at the end of 2025.
Chief executive Adam Holland said trading had “remained challenging” but believes the group is positioned to benefit when customer confidence and investment activity recover.
Alongside the profit warning, Mpac announced the sale of its Lambert bespoke automation division for up to £20 million following a strategic review which concluded the business no longer fitted the group’s long-term plans.
Lambert, which Mpac acquired for £15 million in 2019, generated a pretax loss of £1.6 million in 2025 and ended the year with net assets of £2.1 million.
The division has been sold to Italy-based automation technology company Mech.i.Tronic Spa for an initial £16 million, with a further payment of up to £4 million dependent on Lambert’s financial performance during 2026.
Mpac said the proceeds will be used to significantly reduce net debt, which stood at £47.9 million at the end of 2025, strengthening the group’s financial position as it navigates a subdued trading environment.
Holland described the disposal as a positive outcome for employees and customers, while providing additional flexibility for the wider business.