BATM Advanced Communications warns on lower revenue

2nd Jul 2012 13:25

BATM Advanced Communications, a designer and producer of telecom systems and medical laboratory diagnostic systems, saw its share price take a hit after saying revenue for the half year ended June 30th is set to be four million dollars lower than the same period the previous year. Revenue is now expected to come in at $52m on a like-for-like (lfl) basis and excluding revenues from the discontinued legacy telecom business.The company is currently undergoing a period of transformation and restructuring in its telcoms division and is now focused on growing this business following the decline of Nokia Siemens Networks business. The firm is also expanding its distribution business, supporting the growth of its sterilization business and continuing to invest significantly in achieving more CE certifications for its diagnostics business."Turning to the performance of the two divisions specifically, the telecoms business will show an approximate 20% decline in revenues compared with the equivalent period in 2011, which is marginally lower than management expectations," the firm said in its annual general meeting statement. "The expected 66% decline in OEM revenues from NSN will be partially offset by a 15% increase over the same period last year in the direct IP business in the US as well as initial contributions from two new OEM agreements signed in the last quarter of 2011."The medical business is expected to show better than anticipated revenues, with an increase of approximately 15% over the equivalent period last year, due to growth throughout the division, including initial contributions from the diagnostics business as a result of achieving CE certification, announced in March and May 2012, for two products." BATM expects the combined gross margin to be around 34%, compared with 39% the same period the previous year, as a result of a greater contribution to sales from the medical division and slightly lower-than-expected revenues in the telecoms division. Consequently, the company is now set to show a breakeven position for the first half rather than a small operating profit as was originally anticipated. In the second half of 2012, operating profit is anticipated to be breakeven at the third quarter and return to profitability from the beginning of the fourth quarter 2012."Looking ahead, the telecoms division is expected to return to growth following the completion of our relationship with NSN, while the medical division is expected to become profitable and will see growth in both revenues and margins going forward," the group added. The company believes it is on track to achieve its strategic targets for the full year 2012 and remains optimistic about delivering shareholder value in the medium term.The share price fell 4.27% to 14p by 13:38.NR