"Each and every operational financial parameter improved during the first half compared to the corresponding period in 2014," begins the summary of the half-year results for machine to machine specialists Telit Communications (TCM). Indeed, it's hard to find fault with the recent performance of the Aim-traded group, which is excellently placed to benefit from the booming market for 'Internet of Things' technology.
Among the highlights was the company's sixth year of double-digit revenue growth and a 20 basis point increase in the gross profit margin to 39.7 per cent. The numbers were buoyed by growing sales of a platform that allows companies to build their own connectivity systems, and better margins in its hardware business. This was despite a components shortage in the US, Telit's largest market, which resulted in flat revenues for the region.
Given the company's reliance on continuous product innovation, its research and development costs are fairly high. However, net R&D expenses declined in absolute terms and as a percentage of revenues in the six months to 30 June, while remaining costs - including marketing, general and administrative - all declined as a percentage of revenues, despite small increases in absolute terms.
As a result, broker Canaccord Genuity expects Telit to beat its full-year adjusted pre-tax profit forecast of $30.7m (£19.7m) and earnings per share of 23¢, up from $23.4m and 18¢ for the 2014 calendar year.
TELIT COMMUNICATIONS (TCM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 327p | MARKET VALUE: | £375.8m | |
| TOUCH: | 326-329p | 12-MONTH HIGH: | 344p | LOW: 190p |
| DIVIDEND YIELD: | nil | PE RATIO: | 45 | |
| NET ASSET VALUE: | 212¢* | NET CASH: | $5,000 | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 138.2 | 7.3 | 5.7 | nil |
| 2015 | 156.3 | 8.7 | 6.4 | nil |
| % change | +13 | +20 | +12 | - |
Ex-div: na Payment: na *Includes intangible assets of $78.6m, or 68¢ a share. £1=$1.562 | ||||
