Focusrite (TUNE) is readying new products for the remainder of 2019, following the two introduced over its first half, along with five software updates. This will necessarily drive up the audio equipment manufacturer’s working capital as a proportion of its revenues, chief financial officer Jeremy Wilson says, which has already increased to 19.8 per cent from 16.2 per cent over the prior half year, with a circa £900,000 increase in stock.
It will rise further as Focusrite ramps up stock for new (undisclosed) products and winds down others. Lower creditors also fuelled the working capital rise, Mr Wilson emphasised. Trade and other payables fell 8 per cent on last year, while 96 per cent of customer debts were within terms, the company disclosed.
US price increases were necessary in response to the imposition of US tariffs, but Focusrite’s market share held. These rises also helped the group to maintain the improvement in its gross margin, which increased to 44.3 per cent. Electronic instruments division Novation contracted, with an aged Launchpad product driving sales down 13.9 per cent. “That needs to be refreshed,” chief executive Tim Carroll said, perhaps a hint for things to come.
House broker Panmure Gordon forecasts full-year 2019 pre-tax and amortisation profits of £15.3m and earnings per share of 18p, rising to £15.9m and 18.5p, respectively, in 2020.
| FOCUSRITE (TUNE) | ||||
| ORD PRICE: | 505p | MARKET VALUE: | £293.4m | |
| TOUCH: | 500-510p | 12-MONTH HIGH: | 533p | LOW: 353p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 85p* | NET CASH: | £26.2m | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 38.8 | 5.8 | 9.0 | 1.00 |
| 2019 | 40.4 | 7.2 | 11.1 | 1.20 |
| % change | +4 | +24 | +23 | +20 |
| Ex-div: | 09 May | |||
| Payment: | 05 Jun | |||
| *Includes intangible assets of £6.7m, or 12p a share | ||||
