Vitec (VTC) made millions from the 2012 Olympics, so profits were bound to fall this year with fewer major sporting events. But the camera and surveillance equipment company has been busy slashing costs, so, despite a 9 per cent decline in first half like-for-like revenue, margins jumped and underlying operating profit actually grew 5 per cent to £19.8m. And with further improvements promised, management expects to hit full-year targets.
Vitec spent £6.2m restructuring the business during the period, which explains the slump in reported profits. There will be another slug of one-off costs in the second half, too, although savings will leap from £3m to £5m a year. Strip out the staging business sold last year and underlying operating margin jumped 190 basis points to 12.6 per cent, with sharp gains in all three divisions. That suggests to us a prior claim to be a mid-teens margin business is not just an idle boast.
Admittedly, a tough photographic equipment market whipped 10 per cent off sales at the Imaging division, but better margins meant profit dipped only slightly and demand for more expensive cameras is tipped to pick up soon. Profit actually grew at the Videocom broadcast equipment business and new products should help here.
Broker Investec Securities expects full-year adjusted pre-tax profit of £35.5m and EPS of 54.8p (from £36.2m and 55.3p in 2012).
VITEC (VTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 615p | MARKET VALUE: | £269m | |
| TOUCH: | 610-619p | 12-MONTH HIGH: | 740p | Low: 558p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 143 | |
| NET ASSET VALUE: | 276p* | NET DEBT: | 56% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 177 | 15.8 | 24.2 | 8.50 |
| 2013 | 158 | 10.1 | 14.9 | 8.90 |
| % change | -11 | -36 | -38 | +5 |
Ex-div: 25 Sep Payment: 25 Oct *Includes intangible assets of £69.6m, or 159p a share | ||||
