Ascom: Slow start in the first six months, however strong second half-year anticipated and net profit for the full year 2014 expected to be in line with the previous year
Based on preliminary figures, Ascom is expecting a Group profit for the first half-year of 2014 of around CHF 8-9 million. Despite lower revenues the EBITDA margin at Group level could be held at around 10%. Delayed orders from customers and fewer projects over CHF 1 million were the main reasons for this unsatisfactory first half-year result.
However, Ascom is confident to deliver a strong second half-year result and to achieve an EBITDA margin of 14-16% for the full year in the Core Business. Net profit for the full year is expected to be in line with the previous year.
Overall slower business development in the first half-year
Based on preliminary figures, Ascom generated revenues of around CHF 203 million (H1/2013: CHF 225.1 million) in the first six months of 2014 while incoming orders amounted to around CHF 230 million (H1/2013: CHF 259.7 million). Both incoming orders and net revenue were impacted by negative currency developments. However, both divisions realized a positive book-to-bill ratio.
Despite lower revenues Ascom closed the first half-year 2014 with an EBITDA margin of around 10% at Group level, including a positive impact from non-core one-offs. Ascom is expecting a Group profit for the first half-year 2014 of around CHF 8-9 million (H1/2013: CHF 14.5 million). As of 30 June 2014, the Group shows a net cash position of CHF 2.2 million.
Ascom continued to invest in growth initiatives such as the development of Ascom Myco (a purpose-built smart device for the healthcare sector) and the UNITE software product lines in Wireless Solutions, Capacity Management and integrated solutions capabilities in Network Testing, and in-depth market assessments in both divisions. Wireless Solutions also completed first steps in growth market expansion with the acquisitions in Australia and Malaysia. Overall, Ascom increased its investment in future organic growth development compared to the previous year.
Ascom Myco has been pre-tested with key customers and will be launched as planned in October 2014 with first revenues in 2015. Ascom Myco is one of the most important development projects of the Ascom Group ever.
Ascom strengthened its management team with the appointment of a new Managing Director for Wireless Solutions US, Tim F. Whelehan, and of a new Managing Director for Network Testing APAC, Faiq Khan, both with strong sales background and impressive track records in business development.
Ascom historically has a stronger second half-year and is confident to achieve significantly better results in the coming months. Both divisions show good signs to improve in the second half-year, encouraged by positive business development already in the second quarter 2014 compared to the first one.
Both divisions carry a strong project pipeline, however, given the difficult first half-year, Ascom expects an overall flat revenue development for the current year and sets its EBITDA margin target for the Core Business at 14-16% for 2014. From today's perspective, Ascom is expecting the net profit for the full year 2014 to be in line with the previous year (CHF 36.9 million) thanks to a very strong second half-year.
Ascom will publish further information and full details on its financial statements as well as the complete 2014 Half-Year Report on 20 August 2014.
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