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Anite had signalled that its market was becoming tougher towards the end of H1, resulting in a profit warning for the period (see here). With the results for the six months to October 31 now released, the impact that changes in the mobile market are having are very apparent.
In terms of the numbers, revenue was down a relatively modest 6% to £57.5m compared to the 63% dive in operating profit to £5.3m, with PBT down 64% to £5.1m. The culprit was the Handset testing side of the business – the issues impacting Nokia, Blackberry and HTC meant slow order intake and delayed and reduced spending at Anite. The situation was exacerbated by higher fixed costs due to the acquisition of wireless performance testing provider Propsim (see here). On an organic basis, revenue and operating profit were down 17% and 71% respectively. Network testing had double-digit growth but had low prior year comparatives and it is still a challenging market despite LTE 4G rollouts easing some of the pressure. Travel was also in double-digit land, aided by follow-on contracts and extensions – the unit has a core of customers (and a low cost base) which are enabling it to tick along.
H2 is usually stronger for Anite and management believes that will be the case this time around too but the pressure on the period (particularly Q4) has increased significantly following the disappointing H1 performance, while the usual limited visibility on Handset testing orders will not do anything for comfort levels. The H1 issues were market-led not down to Anite’s execution which is a positive. There is still plenty of momentum in the mobile market which bodes well for the company, but it will have to cope with more disruption in this fast paced and rapidly changing market.
