Scaffolding provider Arena Events’ shares crash down to earth on disappointing trading update

Scaffolding provider Arena Events shares collapsed today after announcing operating issues in its UK business that have reduced profitability.

The company’s stock was down 31.9 per cent on Thursday afternoon after blaming the issues on a number of one-off contracts, plus a delay in receiving the benefits of a planned integration of three British warehouses.

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Arena, which provided scaffolding and seating structures for the Cheltenham horse racing festival and the royal wedding, said: “The operational issues are now being addressed, including a number of senior management changes within the division.

“However, these issues have led to a material reduction in the overall profitability of the UK division. Going forward we would expect UK margins to return to historic levels.”

Chief executive Greg Lawless said: "Whilst the operational issues in the UK division are clearly disappointing, we remain confident in the group's strategy and long-term prospects.

“We are pleased to announce that we have recently secured contracts for the 2019 Rugby World Cup and the 2020 Olympics which gives the board confidence in the future prospects for the group."

Read more: UK construction output increases sharply but outlook paints 'less rosy picture'

Russ Mould, analyst at AJ Bell, said: “If Arena can bounce back quickly, then the shares could recover but investors may take a cautious view.

“Firms which look to acquire at a time when they are already generating strong organic growth can sometimes find they have too much on their plate at one time.”