Somero still confident despite challenging first half

29th Aug 2024 12:54

(Sharecast News) - Concrete levelling equipment specialist Somero Enterprises reported a decline in first-half revenue and profitability on Thursday, attributing the downturn to a combination of external factors including elevated interest rates, labour shortages, concrete rationing, and inclement weather across key markets.

The AIM-traded firm said that for the six months ended 30 June, it recorded revenue of $51.8m, a 12% decrease from the prior year.

Adjusted EBITDA fell 29% to $12.4m, resulting in a 570 basis point reduction in the EBITDA margin to 23.8%.

Profits before tax dropped 32% to $10.6m, while adjusted net income declined 34% to $8m.

Cash flow from operations was significantly impacted, down 67% to $2.9m, with net cash standing at $20.8m, a 17% decrease.

The interim dividend per share was reduced by 20% to eight cents.

Somero said it faced challenges particularly in North America, where revenue fell 8% due to project delays.

Mixed results were reported in other regions, with a stable performance in Europe but declines in Australia and the Middle East.

Revenue from the rest of the world (ROW) declined 38%.

Despite the challenges, Somero said it remained optimistic about the second half, expecting revenue to reach $110m and EBITDA around $30m by the end of the year.

The company also anticipated ending the year with $27m in cash.

Operationally, Somero launched two new products in the first half, including its first electric-powered laser screed, with plans to release a third product in the second half of the year.

The company also established a new service, repair, and training centre in Belgium to enhance support for its European customers.

Additionally, Somero implemented a 15% workforce reduction and stringent cost controls to mitigate the impact of lower revenue on profitability.

"I am pleased with how the company has navigated the challenges presented by the first half of the year," said president and chief executive officer Jack Cooney.

"While revenue decline in North America and Australia impacted performance, our focus on operational efficiency and the enduring nature of our long-term growth drivers ensure we are well placed for when conditions improve.

"The launch of two new products in the period demonstrates our commitment to our long-term growth strategy, and the introduction of our first electric powered laser screed is an exciting milestone for the business."

Cooney said a third new product would be released in the second half, adding that the firm would continue to leverage innovations to deepen its international presence.

"Looking ahead, the resilience of the non-residential market gives us confidence that, as external challenges subside, our performance will improve.

"Given our history of successfully navigating challenging market conditions, and our proven ability to swiftly adapt, I am confident that we will emerge from this testing period even stronger."

At 1229 BST, shares in Somero Enterprises were down 1.99% at 299.9p.

Reporting by Josh White for Sharecast.com.