Double-digit sales declines across all four divisions at CSR point to a brutal six months for the microchip maker. These partly reflect its transition towards selling integrated systems rather than handset components, which helped boost its gross margin by 5 percentage points to a record 56.2 per cent. Even so, underlying operating profit fell by almost a third to $41m (£24m).
Sales at CSR's voice and music, automotive and consumer segments slumped 10, 12 and 18 per cent, respectively, dragging its core revenues down 13 per cent to $328m. The company blamed weak demand for digital cameras and gaming, fierce Chinese competition in the automotive aftermarket, and last year's sales boost caused by a new Chinese law requiring drivers to use hands-free equipment to make phone calls. Revenues also fell 63 per cent at CSR's legacy segment, which it no longer invests in.
On a positive note, the company signed 42 licences for aptX, its wireless audio technology, and secured several design wins for its wireless technology with the likes of Lenovo and Philips. Moreover, management expects its core businesses to return to growth in the second half of the year.
Broker N+1 Singer expects pre-tax profit of $68.5m this year, giving EPS of 30.1¢, rising to $74.5m and 34.7¢ in 2015.
| CSR (CSR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 569p | MARKET VALUE: | £941m | |
| TOUCH: | 567-569p | 12-MONTH HIGH: | 820p | LOW: 473p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 379¢* | NET CASH: | $237m | |
| Half-year to 27 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 500 | 27.0 | 12 | 4.5 |
| 2014 | 374 | 60.8 | 34 | 5.2 |
| % change | -25 | +126 | +183 | +16 |
Ex-div: 13 Aug Payment: 5 Sep *Includes intangible assets of $204m, or 123p a share £1=$1.70 | ||||
