27th Feb 2014 10:11
LONDON (Alliance News) - Spirent Communications PLC Thursday signalled confidence in its new strategy to return to high single-digit organic growth in 2014 as it raised its full-year dividend Thursday, despite seeing pretax profit decline in 2013.
The communications technology company posted a total dividend of 3.54 cents, up 9.9% from 3.22 cents in the previous year.
Spirent saw pretax profit of USD32.7 million, down from USD79.4 million, as revenue declined to USD413.5 million from USD472.4 million in the previous year. In addition to lower revenues, pretax profit also was hit by higher product development costs.
Revenue fell by 19% in the first half, but this rate of decline slowed to 6% in the second half.
Spirent had a challenging year as the onset of new 4G high speed broadband hit 3G technology markets where Spirent has a high market share. As a result of this rapid shift to 4G, a number of Spirent's customers saw declines, which reduced demand for its test systems. However, Spirent also blamed its own historical under-investment in the development in its core technologies, channels to market, and customer support.
In its Networks & Applications division, revenue declined 18%, primarily caused by what Spirent called intense competition in the data centre market that more than offset growth from mobility testing driven by the new 4G network roll-outs.
In Spirent's Wireless & Service Experience division, revenue declined 4%, as the roll-out of 4G hit device vendors profitability, increased competition, and caused a lull in new technology and service launches.
In Service Assurance, revenue declined 16% as service providers remained cautious about spending around their legacy technologies ahead of the arrival of 4G.
As a result of these 4G-related issues and others, Spirent has launched a reorganisation of its activities and a new strategy with the aim to restore revenue to high single-digit organic growth in 2014.
Spirent will invest an additional USD33.0 million in future growth, increasing product development costs 15%, extending its sales channels and entering new markets, including automotive and enterprise.
Although Spirent expressed caution over near-term uncertainties, it said that the disruption and structural changes in its markets had stabilised towards the second half of 2013, and activities at the beginning of 2014 had been in line with expectations.
Spirent is looking to achieve high single-digit organic growth in 2014, and said that its 2014 revenue will be linked to recovery in China, growth in the Americas, and expected stability in Europe.
"The key objectives in 2014 are to enable agile decision making to unleash the creativity and innovation of Spirent's expert and talented people," said Chief Executive Officer Eric Hutchinson in a statement.
Shares in Spirent were trading up 2.4% at 107.90 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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