14th Aug 2014 09:03
LONDON (Alliance News) - Vitec Group PLC Thursday said it is considering selling or closing its loss making IMT business, as it reported an increase in profit for the first half.
The company, which supplies products and services for the broadcast and video, photographic, military, aerospace and government markets, posted pretax profit of GBP14.9 million for the six months to June 30, up from GBP10.1 million a year earlier, even though revenue fell to GBP152.9 million from GBP157.6 million.
Vitec said the adverse year-on-year impact from foreign exchange movements in the first half was GBP10.3 million on revenue and GBP1.8 million on operating profit.
Operating margin remained unchanged at 12.6%.
Vitec said its three operating divisions - videocom, imaging and services - experienced contrasting fortunes during the period.
The videocom division, which specialises in the supply of high-quality broadcast equipment principally for professionals engaged in producing video content for the media industry, saw revenue fall to GBP69.7 million from GBP70.2 million.
Despite the slight dip, Vitec said the division benefited from the inclusion of a strong performance at Teradek and a contribution from supporting the Sochi Winter Olympics. Teradek produces high-quality video encoders and decoders.
However, Vitec said it has decided to exit its IMT business, which forms part of videocom. IMT, which provides wireless microwave products for the military, aerospace and government markets, is a relatively small part of Vitec's business.
London-based Vitec said it has attempted to grow IMT in an "increasingly challenging market that has become overly price driven."
"This was recently demonstrated by the award of certain large government contracts to competitors at prices where we would not generate positive returns," Vitec said.
Additionally, the company said there are limited synergies between IMT business and other activities within the group, and the unit incurred a GBP1.1 million loss during the period compared with a GBP1.4 million profit a year earlier.
As a result, Vitec said it has decided to exit the IMT business, and it is considering either selling or closing the unit.
The imaging division, which provides premium photographic and video equipment to both professional and non-professional users, struggled, with revenue down 13% to GBP64.1 million from GBP73.6 million a year earlier.
Vitec said end markets, particularly the US, have seen a continued slowdown in interchangeable lens camera sales.
"The effect of this market softness has been exacerbated by retailers continuing to destock following high levels of inventory in 2012, plus an overall reduction in the amount of inventory in the retail chain, as the mix continues to swing away from specialist camera retailers towards e-tailers," Vitec said.
The services division, which provides broadcast equipment rental and technical support to television production teams and film crews, improved significantly, with revenue up 40% to GBP19.3 million from GBP13.8 million a year earlier.
Vitec said the services division benefited from contracts to supply the Sochi Winter Olympics, the FIFA World Cup and an increase in its underlying rentals business
Looking ahead, the company said although its order book visibility remained limited, its expectations for the full-year are unchanged.
On the back of its performance, the company increased its interim dividend to 9.3 pence from 8.9 pence a year earlier.
Vitec Group shares were quoted up 0.05 pence at 557.55 pence Thursday morning.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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