CSG flags earnings hit from lacklustre print equipment sales
- 09 February, 2018 11:09
Julie-Ann Kerin - CSG managing director and CEO
Lower than expected print equipment and enterprise solutions sales has seen CSG (ASX:CSV) revise its revenue guidance for the 2018 financial year down by $7 million, to $253 million.
The publicly-listed managed print and IT services provider had previously told shareholders it expected full year revenue to be around $269 million with earnings before interest, tax, depreciation and amortisation (EBITDA) of $30 million.
The revised results, however, also brought EBITDA down to $18.5 - $21 million, and $4.6 million for the first half.
Within the earnings presentation, the company also said it expects to spend $700,000 on redundancies for the full year.
The revised unaudited results show total revenue for the first half of 2018 of $117 million, a 3.06 per cent decline from the same period last year, when the company posted $120.7 million.
The company attributed the reduction on lower than expected sales of print equipment.
The company told shareholders that earnings have also been impacted by sales below expectations in its enterprise solutions business, as it continues to build up its managed IT pipeline.
However, CSG said the technology business continues to grow with subscription revenue increasing by 39 per cent and technology equipment increasing by 50 per cent relative to the prior corresponding period.
“While we are disappointed with our print sales execution, we are pleased with the strong growth in technology with high value subscription seats closing at 19,184 as at 31 December 2017, representing organic growth of 44 per cent relative to the prior corresponding period,” CSG managing director and CEO, Julie-Ann Kerin, told shareholders.
“The technology business will represent approximately 25 per cent of group revenue at the end of FY2018. We remain confident in our growth strategy and the long term opportunity for the business.”
For the second half of 2018, CSG anticipates revenue in the range of $136 million to $143 million. The company also talked about a new partnership with HP from which it expects to drive equipment sales resulting in $13 million increase.
CSG expects revenues of $143 million for the second half and EBITDA of $16 million.