A continued shift towards higher-margin revenue has sharply boosted profits for Zytronic (ZYT), a manufacturer of terminal displays for a variety of applications, including ATMs. That's because the company gets higher gross margins from its PCT touch products than non-touch lines, and a shift in the product mix means PCT now accounts for 71 per cent of overall sales.
"We don't break down the gross margins between touch and non-touch, but the difference is substantial," says chief executive Mark Cambridge. By also eking out more manufacturing efficiencies, group gross margins increased from 33.7 per cent to 36.3 per cent. More encouragingly, Mr Cambridge says sales of larger-size PCT sensor units are increasing, which, although incurring similar costs to smaller versions, are sold at higher prices. Zytronic also managed to increase sales in Asia, the Americas and the UK, but those gains were offset by a sales fall in the EMEA region due to delays in ticketing infrastructure projects.
The company's cash generation remains strong, which not only enabled Zytronic to boost its net cash pile by £1.8m, but also supports the board's progressive dividend policy. Finance director Denis Mullan expects the payout to increase by another 10 per cent next year.
Broker N+1 Singer forecasts adjusted full-year pre-tax profits of £4.4m, giving an EPS of 23.5p, up from £4.2m and 21.9p previously.
ZYTRONIC (ZYT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 314p | MARKET VALUE: | £46m | |
| TOUCH: | 310-317p | 12-MONTH HIGH: | 365p | LOW: 221p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 105p | NET CASH: | £2.3m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 14.7 | 1.74 | 7.3 | 4.0 |
| 2009 | 15.9 | 2.30 | 11.6 | 5.0 |
| 2010 | 18.5 | 2.92 | 14.9 | 7.0 |
| 2011 | 20.5 | 3.56 | 18.3 | 7.7 |
| 2012 | 20.4 | 4.19 | 22.2 | 8.5 |
| % change | - | +18 | +21 | +10 |
Ex-div: 27 Feb Payment: 15 Mar | ||||
