9th Sep 2013 12:33
LONDON (Alliance News) - Brady PLC Monday lowered its full-year revenue forecast to GBP31.0 million from GBP35.5 million due to the size and complexity of the contracts it is currently negotiating. This followed narrowed losses in the six months ended June 30, as Brady increased revenues and weathered downward price pressure in commodity and energy prices.
The provider of risk management and trading software for global commodity markets said it remained confident that new contracts in advanced discussion would be signed in the second half of the year. Revenues would be lower this year, Chief Executive Officer Gavin Lavelle said, as big contracts take longer to deliver.
"These contracts are significantly larger than our previous transactions," said Lavelle.
Revenue growth was weaker than expected due to slow decision making by producers. Brady posted revenues of GBP14.9 million, up from GBP12.1 million in the previous year. Pretax losses narrowed to GBP144,000 from a pretax loss of GBP831,000. In its Brady Metals division, revenues decreased 7.9% to GBP3.5 million due to delayed timing in new licence deals.
The company picked up four new clients in Asia and would continue expanding its client base there and in the US, Lavelle said, as the US economy was bouncing back faster than Europe.
Brady remained positive about its position, bolstered by its opportunities pipelines and new significant contracts in advanced discussions. It cautioned that revenue growth from the deals it anticipates sealing in the second half of the year would only be felt in 2014. Lavelle said that although it was disappointing that they had lowered their forecast for the end of 2013, the company was confident it would have substantial growth in 2014.
Although its revenues are not in direct correlation with commodity and energy prices, Brady said, this had effected the behaviour of traders, and the general improvement in the global economy had yet to be reflected in this market. The company has put in place cost-reduction initiatives over the summer, which it hoped would reduce annual expenses by around GBP2.2 million, Although these savings had not impacted its first half, the benefits would be seen in the third quarter, Brady said.
There would need to be further tweaking of the cost base of its energy business, Lavelle said, but Brady had already seen benefits of around GBP700,000 this year from the cost-cutting measures.
Brady shares were trading down 11% at 64.25 pence early Monday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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