While numerous other companies were endeavouring to diversify outside the UK public sector, Tribal chose instead to refocus its efforts on the education, learning and training markets (see Education-focused Tribal grows in H1) by ridding itself entirely of its health, government and resorucing businesses. But a fairly lacklustre trading update (for the period from 30th June 2011 to date) indicates that, while its focused efforts might be helping it to weather the storm, there’s certainly a storm to be weathered in its target markets.
In particular, its UK business looks like it continues an uphill struggle. While Tribal states that its ‘Technology’ business is making “good progress”, it refers to long purchasing cycles in the UK. And the UK doesn’t even get a mention with regards to the ‘Services’ business, with the US market held up as the reason for the business performing “well” during the period in question. For the Group as whole, committed income levels are down compared to 30th June (from £180.2 million to £176.6 million) suggesting that the international business might be strong but it is struggling to make up for poor results domestically.
The good news is that the cost reduction programme is complete – annualised savings of £5 million – and Tribal states it is “now seeing the benefits of this programme in its operating margins”. We await the interim results with interest.