SDL (SDL) serves brands seeking to manage, translate and deliver localised content around the world. A change in tack after a tough few years resulted in a 1 per cent rise in underlying operating profit to £11.6m.
New boss Adolfo Hernandez hopes to revive growth by targeting more profitable markets and promising sectors such as life sciences. He also plans to reduce costs and boost efficiency through automation, outsourcing, shrewder investment and a simpler corporate structure. The strategy fuelled an 8 per cent rise in language technology sales, as constant-currency bookings climbed 9 per cent and machine translation revenue soared 44 per cent. But divisional profit was flat due to higher sales, marketing and development costs.
Sales fell 2 per cent in the largest division, language services, which provides a content translation service. That primarily reflected the loss of most of the Microsoft account in late 2015. The segment's margin shrunk due to planned investments, but winning clients such as PSA Peugeot Citroën helped soften the blow. Global content technologies revenue also fell, but licensing wins and reorganisation benefits meant the division swung to an adjusted pre-tax profit of £2.3m.
Broker N+1 Singer thinks SDL's planned disposals of peripheral businesses could fetch between £25m and £50m. It expects adjusted pre-tax profit of £25.8m this year, giving EPS of 23.5p, up from £20.6m and 16.1p in 2015.
| SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 440p | MARKET VALUE: | £358m | |
| TOUCH: | 434-440p | 12-MONTH HIGH: | 464p | LOW: 317p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | na | |
| NET ASSET VALUE: | 219p* | NET CASH: | £13.3m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 121 | 8.9 | 8.5 | nil |
| 2016 | 120 | 4.9 | 5.6 | nil |
| % change | - | -45 | -34 | - |
*Includes intangible assets of £147m, or 181p a share | ||||
