Anite warns on first-half profits after quiet start for mobile handsets

16th Aug 2013 07:23

A slow start in the market for testing mobile handsets means that FTSE 250 listed Anite is likely to see flat sales and lower profits in the first half of the year. The extra overheads stemming from Anite's acquisition of wireless testing business Propsim in January would mean that what was normally a seasonally quieter first quarter would see profits dragged lower.But Chief Executive Christopher Humphrey aimed to reassure: "Although the first quarter has proved to be relatively quiet for handset testing, our expectations for the year are unchanged albeit with a greater second half emphasis." Anite, which has its head office in Slough, explained that momentum in handset testing order intake had risen slightly ahead of the same period last year but the slow phasing of these orders and a relatively low opening product backlog at the start of the period meant revenue and adjusted operating profit was lower than the strong comparative period last year.Although network testing and travel businesses both had strong first quarters with each achieving revenue and adjusted operating profit well ahead of weak comparatives last year, it could not compensate.But Anite pointed out that its sales pipeline, in particular in handset testing, continued to build over the period and was materially ahead of the same period last year. The company added that the fundamental growth drivers for each of its businesses remain unchanged, and it had continued to invest in research and development.Said Humphrey: "With strong order pipelines and fundamental growth drivers in place across all three businesses, we continue to be confident about Anite's prospects."Broker Jefferies said it did not anticipate any structural slowdown in end-market growth for Anite. "Our colleagues in Asia this week met with the management of Anritsu, who indicated that the handset testing market is expected to grow at 10% versus nearer 8% for the overall test & measurement market. They also confirmed that pricing pressure is not a meaningful feature as well as citing China as a major LTE testing opportunity. "These are all favourable indicators for Anite, which is heavily exposed to Handset Testing (66% of FY13 revenue) which has seemingly created an early leadership position at China Mobile."Jefferies predicted there was solid scope for an improved pipeline conversion rate for Anite in the second half and its estimates for full year 2014 remained unchanged, expecting 16% organic handset testing growth and 12.8% group organic growth.Shares in Anite opened down 5.9% at 117.6p on Friday.OH