Focusrite’s (TUNE) revenue climbed by a quarter at constant currencies in the six months to 29 February, reflecting the July and December acquisitions of ADAM Audio and Martin Audio. Excluding these purchases, underlying sales fell 5.1 per cent to £38.4m. This came as the music and audio group worked through inventory of its older Scarlett microphone preamps, affecting orders of the newer model.
The gross margin improved by 1.8 percentage points to 46.1 per cent, thanks to increased prices on new items and a shift towards higher margin merchandise. This boosted gross profit by almost 30 per cent to £23m. But amid acquisitions-related costs and investment in marketing, statutory operating profit more than halved to £3m.
Supply chain disruption from Covid-19 delayed around £2m of orders in February, although manufacturing in China has returned to normal. Uncertainty regarding the pandemic means the half-year dividend has been deferred. While the £40m Martin Audio acquisition pushed the group from £14.9m of net cash at the August year-end to £19.9m of net debt, this had reduced to £16m by the end of April.
House broker Panmure Gordon has raised its outlook, now anticipating adjusted pre-tax profit of £17.9m and EPS of 24.2p for the full year. This is up from £15.9m and 21.4p in 2019.
| FOCUSRITE (TUNE) | ||||
| ORD PRICE: | 580p | MARKET VALUE: | £333m | |
| TOUCH: | 578-582p | 12-MONTH HIGH: | 750p | LOW: 376p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 45 | |
| NET ASSET VALUE: | 96p* | NET DEBT: | 36% | |
| Half-year to 29 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 40.4 | 7.15 | 11.1 | 1.20 |
| 2020 | 49.9 | 2.69 | 3.6 | nil |
| % change | +24 | -62 | -68 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £59.1m in intangible assets, or 103p a share | ||||
