Translation and web content management group SDL beat consensus expectations for the first half, buoyed by organic sales growth of 8 per cent. After reporting a record year in 2011, the Maidenhead group saw the solid pace of new client wins continue into the first half and this is expected to continue, according to executive chairman Mark Lancaster. While Europe was weaker, SDL reported growth across all its other geographies, especially in the US, with returns now starting to be seen from strategic investments made in Asia.
The sharp increase in first-half revenues included 12 per cent growth stemming from the Alterian acquisition, which contributed £0.2m to profit, despite guidance the unit would incur a loss. Mr Lancaster attributed this to an initially cautious outlook for the business. Language Services, accounting for well over two-thirds of profits, was the strongest unit, posting 5 per cent organic sales growth following new business from big company names such as Maersk and Samsung Mobile. By contrast, profits from Language Technologies fell sharply on flat revenues, although this mainly reflected investment in growth markets, in particular Asia.
Chief executive John Hunter was upbeat about the enterprise scalability of Alterian's technology, as well as the potential for geographical expansion. While expressing caution about the general macroeconomic conditions, Mr Lancaster was generally optimistic about SDL's customer pipeline, especially in the US and Asia.
Broker Investec Securities is maintaining its full-year estimates of pre-tax profit of £42m and EPS of 39.9p (from £39.7m and 37.1p in 2011).
SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 665p | MARKET VALUE: | £533m | |
| TOUCH: | 660-669p | 12-MONTH HIGH: | 766p | LOW: 586p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 20 | |
| NET ASSET VALUE*: | 279p | NET DEBT: | 2% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 111 | 15.8 | 15.3 | nil |
| 2012 | 133 | 16.4 | 15.6 | nil |
| % change | +20 | +4 | +2 | - |
*Includes intangible assets of £243m, or 303p a share | ||||
