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Vitec still good value

RESULTS: Vitec is stripping out costs and the full-year results should meet forecasts
August 22, 2013

Vitec (VTC) made millions from the 2012 Olympics, so profits were bound to fall this year with fewer major sporting events. But the camera and surveillance equipment company has been busy slashing costs, so, despite a 9 per cent decline in first half like-for-like revenue, margins jumped and underlying operating profit actually grew 5 per cent to £19.8m. And with further improvements promised, management expects to hit full-year targets.

IC TIP: Buy at 615p

Vitec spent £6.2m restructuring the business during the period, which explains the slump in reported profits. There will be another slug of one-off costs in the second half, too, although savings will leap from £3m to £5m a year. Strip out the staging business sold last year and underlying operating margin jumped 190 basis points to 12.6 per cent, with sharp gains in all three divisions. That suggests to us a prior claim to be a mid-teens margin business is not just an idle boast.

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