It’s no surprise that investors have sent Promethean’s share price tumbling by 16.7% to 61p morning trading. Since the year end, things appear to have gone from bad to worse for the provider of interactive learning technologies. When we reported on Prometheans FY11 results, growth in the company’s international business softened the Group’s overall revenue decline (see Promethean learns benefits of international spread). But in the first three months of 2012, even international sales growth of 22% couldn’t make up for the 40% decline in the company’s core North American business. Overall, Group revenues were down 14.4% to £35.9m, or 15.3% down at constant currency.
Looking at the detail, interactive display system revenues were down 14.1% to £31.2m, and it looks like the company experienced pricing pressure (volumes were down 11%). Meanwhile, learner response system revenues fell 16% to £4.6m (volumes down 21%).
Promethean continues to push forwards with its investment in an increasingly integrated set of products and services. It must be a very hard call at the moment but it is clear that management firmly believes in the need for its products. The question has to be ‘when will demand pick up’? The company has tried to put a positive spin on the results, stating that growth will continue in the international region, that 2012 revenues will be more heavily weighted towards H2, and that the US market’s key buying season is from June to September. But there’s no getting away from the fact the results make depressing reading.
At the end of the quarter, Promethean had net cash of £12.2m (vs. £10.3m at 31st March 2011, and £21.8m at the end of December 2011, reflecting business seasonality). It is positive that the business is being well managed financially, allowing Promethean to ride out the storm. Like Promethean, we like to believe that Governments will start investing again in technology in the classroom otherwise our children will be ill-prepared for life after post-education.