After an encouraging final quarter, Spirent Communications (SPT) expects to beat profit forecasts for the 2019 financial year. Citing important contract wins and customers continuing to invest in 5G (fifth-generation mobile) infrastructure, the telecoms testing group said that revenues grew by 5.5 per cent to $503m (£388m). It expects adjusted operating profits to land between $91m and $93m – higher than the $77.1m figure reported in 2018.
Spirent’s updated guidance implies a mid-point operating margin of 18.3 per cent – greatly exceeding broker Liberum’s estimate of 16.7 per cent, and consensus expectations of 16.3 per cent. The group benefited specifically from good growth in its principal networks and security division, fuelled by rising demand for 400G high-speed ethernet test products – as well as “positive momentum” for its positioning products. While Spirent’s lifecycle service assurance business delivered revenues broadly in line with the prior year, order growth was strong here over the past three months – with delivery mostly scheduled for 2020.
To top it off, cash at the year-end sat at $183m – up from $122m in 2018. The group noted that strong working capital management had spurred higher cash conversion.
