A boom in demand from the oil & gas industry is driving growth at engineering design software company Aveva (AVV), and underlying half-year pre-tax profit jumped 13 per cent to £32.3m. Sales at the loss-making enterprise solutions unit, however, grew much slower than expected, and chief executive Richard Longdon expects only flat revenue and no profit there again this year.
Aveva's shares fell sharply in response - 5 per cent top-line growth at enterprise solutions fell some way short of City estimates for about 20 per cent growth. The company blames financial problems at a big Latin America shipyard and an oil company's decision to shelve the roll-out of a new IT solution. Still, enterprise solutions represents just 12 per cent of group revenue and sales at the core engineering and design systems division jumped 12 per cent to £95.7m. Ongoing demand for more flexible rental licenses, which grew 14 per cent to £47.2m, were important here and - with more Korean shipyards switching to oil & gas projects - sales in Asia surged 22 per cent to £42.3m. North America is picking up, too, and demand for Aveva's highly sophisticated design tools will only increase as explorers drill in ever more inhospitable places.
Broker Panmure Gordon expects full-year adjusted pre-tax profit of £76.9m, giving adjusted EPS of 83.7p (from £70.7m and 77.5p in 2013), rising to 96.5p in 2015.
AVEVA (AVV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,364p | MARKET VALUE: | £1.51bn | |
| TOUCH: | 2,362-2,367p | 12-MONTH HIGH: | 2,668p | Low: 1,953p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 34 | |
| NET ASSET VALUE: | 245p* | NET CASH: | £95.8m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 97.6 | 25.8 | 27.0 | 4.5 |
| 2013 | 108 | 27.3 | 29.6 | 5.0 |
| % change | +11 | +6 | +10 | +11 |
Ex-div: 31 Dec Payment: 3 Feb *Includes intangible assets of £62.9m, or 98p a share | ||||
