Adelaide based technology manufacturer and distributor, Legend Corporation has recorded a net profit of just $3.2 million for the six months ending December 31.
This reaches the company’s revised guidance released in November from $5 million reported in the previous corresponding period, to a figure between $2.7 to $3.2 million.
Legend CEO, Brad Dowe, said put it down to an unexpected reduction in demand from power utilities, reduced rate of growth in mining related projects and continued softness in residential and commercial construction was disappointing.
“We invested heavily in sales resources and senior management in line with our growth objectives for Electrical, Power and Infrastructure and the growth achieved has not been sufficient to absorb our cost increases,” Dowe stated.
The Group’s Electrical, Power and Infrastructure divisions achieved a 4 per cent increase in revenue, however its Innovative Electrical Solutions business dipped 34 per cent. The company’s main business is in electrical connectors, cables, tools and test and measurement instruments for use in commercial, residential and industrial construction.
Earnings per share was down 38 per cent to 1.4 cents, when compared to same period last year.
Group revenue took a two per cent dip. According to a statement on the ASX, Legend said revenue expectations weren’t achieved due to soft sales in NSW power utilities and mining related projects.
Operating costs for the six months increased to $1.7 million as the business puts itself in a position of growth, investing in additional sales and management assets.
The company pumped $17.4 million in the past couple of years into market sectors that are expected to achieve above average growth in the medium to long term, it said in the statement to the ASX.
“While this growth hasn’t been delivered in the first half, we are confident in the longer term our investment in fibre optic, specialist power products and specialist safety equipment will position the company to deliver growth in shareholder value,” Legend stated.
“Immediate steps have been taken to match operating expenses to business conditions,” Dowe said. “We expect an improved second half performance provided there is no further deterioration in the markets of our products. We are focused on delivering the growth from our recent acquisitions in addition to widening our product lines and sales regions to best capitalise on our resources.”
Last year, Legend exited from the sale of hard drives, turning its focus on power, electrical and infrastructure segments. It still maintains a presence in manufacturing integrated circuits and surface mounted boards, but says 85 percent of its annual revenue and 70 per cent of EBIT is generated by the electrical, power and infrastructure segments.