Mike Pulli, set-top box maker Pace’s newly-appointed CEO, delivered an upbeat report to analysts, along with the company’s full-year numbers (to December 31st), on March 6th. The market liked what it heard, marking up Pace’s share price by 11 per cent during early trading (9p) to 90p.
Pulli has been in post only since December (he was formerly in charge of the company’s North American sales division) but had the unpleasant task of unveiling annual (pre-tax) profits that had halved during the year (from $110.2 million to $54.7 million) despite revenues that rose by a very healthy $300 million (from $2 billion to $2.3 billion).
Pulli, and chairman Allan Leighton, have had a challenging year which included letting go Neil Gaydon (CEO) and more recently the company’s CFO, as it struggled to manage a slew of problems during the year. These included over stocking of inventory, the Japanese earthquake and Thai floods which alarmed the city and investors and saw a massive marking down of the company’s share price which last year once stood at 220p to just 44p.
In the report itself that was further hard news to digest, not least that European sales had fallen back 19 per cent. Pace added that the effects of the floods in Thailand would “continue to impact results during 2012, with the impact to be predominantly felt during the first half of the year” as hard-drive supplies continue to be squeezed.
But there was also plenty of good news, with strong sales in Latin America and North America. Pace has held its Gross Margin at 19.2 per cent, although group net debt has crept up from $311 million to $321.7 million.
Pulli told analysts that Pace’s previous acquisitions were now fully integrated, although its French (pace Europe) division would be subject to more reorganisation.
He added that this current year’s trading revenues would be broadly flat, although he was confident that cash flow would remain “strong” during the year.