If there is any consolation to these dismal financial results from translation and web content management group SDL (SDL), it's that they were not much worse than forecast in a profit warning in June. Revenues were down between 1 per cent and 15 per cent across all four business divisions, which combined with increased investment in sales and marketing, resulted in a plunge in adjusted pre-tax profits from £20.8m to £2.8m.
Granted, SDL hired 65 new sales staff in the first half in the hope they will be able to turn around the stuttering sales performance. But they will have some catching up to do if SDL is to meet even the recently downgraded full-year forecasts: the company expects adjusted pre-tax profits of between £15m-£20m in the current year, down from £37m in 2012. Moreover, geographic trends in the first half highlight "the execution issues of the business", according to analysts at Investec; sales counter-intuitively rose 4 per cent in recession-hit Europe, but fell 6 per cent in the Americas and 4 per cent in Asia Pacific.
Chief executive Mark Lancaster says he expects "momentum to return to sales in the second half", setting up the company for a substantial recovery in 2014. Broker N+1 Singer forecasts current year adjusted pre-tax profits of £15m and EPS of 13.8p, rising to £24.5m and 23.1p in 2014 (from £37m and 35.6p in 2012).
SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 327p | MARKET VALUE: | £261m | |
| TOUCH: | 326-328p | 12-MONTH HIGH: | 685p | LOW: 245p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 289p* | NET CASH: | £0.58m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 134 | 16.4 | 15.6 | nil |
| 2013 | 131 | -2.3 | -1.7 | nil |
| % change | -2 | - | - | - |
*Includes intangible assets of £241m, or 300p a share | ||||
