AVEVA surges after forecast-beating results

28th May 2012 07:09

The engineering software company, AVEVA, has reported record profits for the 12 months ended March 21st as the firm capitalised on growing demand from deep-water oil and gas exploration.AVEVA delivered revenue during the year of £195.9m, this was better than the consensus expectation of £192.04m and represented an increase of 13% against the prior year. This company says the second half of the year was particularly strong, driven by organic growth of 15% over the same period in 2010/11.Adjusted profit before tax increased by 14% over the previous year to £62.3m, beating expectations of £60.94m. The adjusted profit margin was 32% (2011 - 31%) while adjusted basic earnings per share came in at 63.81p, again beating expectations of 63.55p.AVEVA has been a notable success over the last five years and trades at a price to earnings ratio of 18 times (excluding cash). Some analysts have commented that these results needed to come in significantly ahead of expectations for the shares to rise given the already high valuation. They clearly did, with the stock up 12.2% at 1,661p in afternoon trade on Monday.According to analysts at Jefferies, the results "confirm that AVEVA continues to benefit from strong demand in the oil and gas vertical, in turn supporting our double-digit organic growth estimate for FY13." Meanwhile, Merchant Securities said in a research note this morning that the figures were "surprisingly strong". Both brokers maintained their 'buy' recommendations for the stock.AVEVA pointed out that the biggest driver for growth has been marine-based oil and gas exploration, with "deep-water rig activity is at an all-time high".Commenting on the outlook, Chief Executive Richard Longdon said: "We expect growth in the oil and gas industry to continue apace along with our expanding presence in mining. "Power is set to provide a solid base of customers continuing to prepare for the growth in nuclear whilst marine is expected to remain slow. "Geographically, we expect a continued strong performance in Latin America, a return to strong growth in China following the reorganisation and we are continuing to invest in developing a much larger organisation in India."BS