27th Mar 2014 11:07
LONDON (Alliance News) - Mobile Streams PLC Thursday warned that its full-year earnings before interest, tax, depreciation and amortisation will be materially lower than the previous year, as the depreciating value of the Argentine peso hit pretax profit in the half year ended December 31, 2013.
The company, which provides technology and services to publish content on wireless devices, has been hurt by the weakening of the peso against the dollar, and also by increased marketing expenses.
In January the Argentine peso was suddenly devalued, which has further hit its results as expressed in sterling for 2014. Sterling-based revenues fell by around 20% in January, Mobile Streams said, and although the peso has remained relatively stable since then, future movements in the currency could yet hit its results.
Mobile Streams has acted to counter this by implementing retail price increases in Argentina and renegotiating advertising contracts from dollars to pesos. It is also continuing its strategy of diversifying its revenue sources through other markets such Mexico, Colombia and Brazil.
On top of this, the company has begun to step up the repatriation of its funds from Argentina. As a result two thirds of its cash is now located outside of the country. However, due to the costs of the repatriation via 'blue chip swaps', it incurred a loss of GBP178,000 between January 1 and March 20, which will hit its second half.
The company posted a pretax profit of GBP1.1 million in the half year to December 31, down from GBP1.9 million in the same period a year before. Revenue increased to GBP27.0 million from GBP23.7 million, but this was offset by higher sales costs, marketing costs and administrative expenses. Gross margin declined to 30.1% from 31.7% in the previous year as it expanded into new markets.
Despite its currency woes, Mobile streams remained bullish about its future, saying it believes it has opportunities to grow its subscriber base in all of its principle markets. It plans to add carrier billing services with other mobile network operators in Brazil, Mexico and Colombia, and looking at other mobile phone markets for potential expansion.
Shares in Mobile Streams were trading down 3.0% at 25.950 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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