Touch sensor products maker Zytronic (ZYT) warned less than a fortnight ago that profits in the first seven months of its financial year had halved. The shares have, too, and the scope for any significant recovery appears some way off as customers remain reluctant to commit to orders.
Visibility has always been an issue for Zytronic, given it has little idea what's in store more than six weeks in advance. Chief executive Mark Cambridge admits some of these big capital projects could be deferred until the end of 2013, or even next year. Orders for new ticketing machines for train stations and parking spaces have not come back yet, and other projects are undergoing time-consuming redesigns. Coca Cola and its Freestyle drinks machines are blamed for a big slug of the lost half-year revenue. Slow sales led to inventory build-up and Coke has only just begun reordering.
True, Zytronic is looking to ramp up outside the US, but this looks like a slow-burner, and Samsung's decision to ditch its uVend dispenser hasn't helped the company. It has trimmed the wage bill, but other costs are fixed and lower volumes, especially of larger display panels, sliced 10 percentage points off gross margin, hammering the bottom line.
Broker N+1 Singer expects full-year adjusted pre-tax profit of £1.6m and EPS of 8.5p (from £4.2m and 21.9p in 2012), rising to £2m and 10.6p, respectively, in 2014.
ZYTRONIC (ZYT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 178p | MARKET VALUE: | £26.5m | |
| TOUCH: | 177-180p | 12-MONTH HIGH: | 365p | Low: 148p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 103p | NET CASH: | £2.8m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 10.6 | 2.12 | 11.1 | 2.60 |
| 2013 | 8.5 | 0.76 | 4.1 | 2.75 |
| % change | -20 | -64 | -63 | +6 |
Ex-div: 10 Jul Payment: 26 Jul | ||||
