Promethean World, supplier of interactive learning technologies, is performing a difficult balancing act. In a tough education market, the company saw total revenues decline 11.9% to £107.8 million in the first half of the year (or down 7.2% on a constant currency basis). Acutely conscious that its core markets, of North America and Continental Europe, remain “challenging” it has pursued a cost cutting exercise, bringing the cost base down by £3.3 million or 9.2% compared to H110. This enabled the company to remain profitable, though the operating profit was still down by 34.2% and ‘adjusted’ EBITDA was down 22.9% to £12.6 million.
The resizing of the cost base was completed in Q1, indicating that Promethean is now comfortable with the levels it has achieved. This would indicate a certain amount of optimism that the business will return to growth in the medium-to-long term. Indeed, its H1 report states, “We continue to believe the long-term drivers of demand remain strong as governments recognize the role that technology will play in creating 21st century education systems”. And, the good news is that the rate of revenue decline slowed considerably in H2: Q1 revenues were down 22% (or 20% at constant currently) - see Promethean: core business suffers big Q1 decline - while Q2 revenues were down 3.8% (and actually increased 3.5% at constant currency). This was, though, largely the result of shipments one large contract in Italy. And it's worth noting that, according to market research quoted by Promethean, although it remains ‘global number two’ in interactive whiteboards and ‘global number one’ in learner response systems, its market share has eroded marginally over the past year.
The good news is that Promethean has made progress in diversifying the business. For example, it entered the business and government training marketplaces and signed a “major” pilot project with the Mexican government. The move makes sense, although the company is surely finding that selling to large corporates and major government departments requires an entirely different approach to selling to individual schools.