The US-China tariff war has proven a “bit annoying” for Vitec (VTC), chief executive Stephen Bird, admits. The US government’s imposition of tariffs on goods coming from China hampered the camera supports manufacturer’s imaging division, forcing Vitec to put its prices up. But unlike Vitec’s competitors, most of whom are Chinese and are bearing the full brunt of the tariffs, Vitec only sources half of its products from China (bags, less expensive tripods), with the other half coming from Italy, and is thus less affected. Vitec’s competitors are increasing their prices and the company is stealing market share. “There are signs that this strategically is... not a bad thing for us,” Mr Bird says.
Vitec is restructuring its imaging solutions business in response to the onslaught of ecommerce, and this is being completed quicker than previously anticipated. More than 50 per cent of Vitec’s imaging products are sold online, and it is becoming less economical to cater for traditional retailers. Vitec is therefore dismantling the organisation that caters for local retailers across Europe, investing instead in a digital outfit based in Italy, where Amazon has centralised its distribution and buying for Vitec products.
While medium-term prospects for imaging are intriguing, there was some short-term pain as the division’s statutory operating profits fell 9 per cent against the prior year’s first half. Pressure from smartphones on traditional camera sales added to the upheaval wrought across retail by ecommerce, the company says.
Investec forecasts full-year 2019 pre-tax profits of £55.2m and EPS of 90.6p, rising to £61m and 100.1p, respectively, in 2020.
| VITEC (VTC) | ||||
| ORD PRICE: | 1,090p | MARKET VALUE: | £494m | |
| TOUCH: | 1,090-1,105p | 12-MONTH HIGH: | 1,430p | LOW: 1,025p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 351p* | NET DEBT: | 55%** | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 183 | 19.7 | 38.2 | 11.5 |
| 2019 | 184 | 16.6 | 27.0 | 12.3 |
| % change | +0.5 | -16 | -29 | +7 |
| Ex-div: | 19 Sep | |||
| Payment: | 18 Oct | |||
| *Includes intangible assets of £132m, or 291p a share **Does not include lease liabilities of £21.6m | ||||
