Pace raises forecast, HDD supply disruption eases
July 24, 2012
Digital TV technology specialist Pace has raised its full-year earnings forecast as margins improved and the supply disruptions that marred the company’s profit in the first half receded.
Announcing its Interim Results for the six months ended June 30th 2012, Pace said full-year operating margin would be greater than its previous forecast of 7 per cent.
Pace had faced supply constraints following flooding at the Thai operations of its hard drive supplier, Western Digital Corp, but the worst seems to be over.
The company said it expects the supply disruptions to hurt its full-year earnings before interest, tax, depreciation and amortisation for the year by $27 million (€23m). It had earlier forecast an impact of between $25 million and $35 million.
Pace, which reported revenue of $2.31 billion last year, expects revenue to be flat this year. With revenue having fallen 15 per cent to $1.01 billion in the first half, the company’s outlook implies strong revenue growth in the second half.
Commenting on the results, Mike Pulli, Chief Executive Officer said: “Pace has had an encouraging start to 2012; recovery is under way and we are becoming a more profitable, cash generative company. We have a clear strategy and are making good progress in implementing our plans. We are leading the market in the evolution to next generation Media Servers and our widening out into software and services is gaining momentum. Our focus on operational improvement and efficiency has delivered material benefits in the first six months of the year; additional cost saving opportunities are being pursued which will contribute further to profitability this year and beyond 2012. The increased interim dividend reflects the Board’s confidence in the outlook and the future prospects for Pace. We have clear visibility on revenues in H2 and remain firmly focused on execution and continuing to create a leaner, more profitable business.”
Shares of the company were up 15 per cent at 132.25 pence at 11.00 GMT.