Investors in Arm (ARM) may be fretting about volatile global markets, waning demand for smartphones, the slowing Chinese economy and growing uncertainty about key customer Apple (AAPL) and rival Imagination (IMG). These results should be reassuring: the microchip titan's operating profit surged 31 per cent to £406m in 2015.
Arm's powerful microchips can fit in the "dimple of a golf ball", says finance chief Chris Kennedy. The group licenses out its designs then collects a royalty every time a customer ships a device containing one of its chips. It inked 173 processor licences in the period, which drove licensing sales up 5 per cent to £381m. Moreover, shipments of Arm-based chips soared more than a fifth to about 14.8bn as customers deployed the group's technology in smartphones, sensors and enterprise servers. Coupled with robust demand for newer, more lucrative chips, that drove royalty revenue up 41 per cent to £510m.
In spite of macroeconomic headwinds, management expects full-year revenue to broadly meet market expectations. Broker Credit Suisse expects EPS of 32.7p, rising to 38.1p in 2017 (from 30.3p in FY15).
| ARM (ARM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 920p | MARKET VALUE: | £12.9bn | |
| TOUCH: | 919-920p | 12-MONTH HIGH: | 1,232p | LOW: 812p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 38 | |
| NET ASSET VALUE: | 128p* | NET CASH: | £951m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 492 | 157 | 8.4 | 3.48 |
| 2012 | 577 | 221 | 11.7 | 4.50 |
| 2013 | 715 | 163 | 7.5 | 5.70 |
| 2014 | 795 | 317 | 18.2 | 7.02 |
| 2015 | 968 | 415 | 24.1 | 8.78 |
| % change | +22 | +31 | +32 | +25 |
Ex-div: 21 Apr Payment: 13 May *Includes intangible assets of £743m, or 53p a share | ||||
