Sharp declines in sales of Pace 's (PIC) set-top boxes and media equipment, which it sells to telecom and PayTV providers, precipitated a 4 per cent drop in the group's shares. The abrupt departure of its finance chief won't have filled investors with confidence, either.
Pace's troubles were rooted in a 23 per cent sales slump at its PayTV consumer premise equipment (CPE) segment to $971m (£571m). Revenues from set-top boxes and media gateways fell 17 per cent, while sales of network gateways dropped 59 per cent. Pace blames those declines on the loss of sole-supplier arrangements with major North American customers last year.
Fortunately, recently acquired Aurora Networks came to the rescue, more than tripling Pace's non-CPE sales to $168m. The connectivity specialist's gains reflect strong interest from telecom operators, who are turning to Aurora to expand their bandwidth capacities in the face of soaring global data consumption.
Aurora's outperformance drove a 10 per cent rise in Pace's adjusted cash profits to over $106m. The group also slashed its underlying operating costs by over 6 per cent and paid down about 40 per cent of the £279m of net debt used to fund the acquisition.
Pace reiterated its full-year sales guidance of $2.7bn and raised its cash-flow guidance slightly. Broker Liberum Capital expects adjusted pre-tax profit of $231m, giving EPS of 53.2¢, rising to $243m and 56.1¢ in 2015.
| PACE (PIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 357p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 356-358p | 12-MONTH HIGH: | 487p | LOW: 248p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 195¢* | NET DEBT: | 27% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 1.32 | 68.6 | 16.4 | 1.83 |
| 2014 | 1.14 | 72.0 | 17.8 | 2.25 |
| % change | -14 | +5 | +9 | +23 |
Ex-div: 5 Nov Payment: 6 Dec *Includes intangible assets of $802m, or 255¢ a share £1=$1.70 | ||||
