Amino Technologies on Tuesday said annual pre-tax profits fell by more than a third as rising component prices and lower than anticipated orders weighed.
For the year ended 30 November, profit before tax met revised consensus market expectations despite falling 38% to $8.2m and revenues slipped 7% to $88.9m.
The company blamed the slump in profits on lower-than-expected orders, brought on by 'significant' macro-economic headwinds, particularly in OTT TV vendor hardware during the second half of the year.
But the company said its turnaround programme targeting higher margin, recurring software revenues would deliver growth. The programme was expected to be completed in April this year.
The company said it would exit from low margin, commoditised hardware activities, a move which was anticipated to reduce revenues by about 20%, and anticipated adjusted operating profit by 10%, in 2019.
'The board firmly believes that the strategic decision to accelerate the focus on software and services and move away from low margin hardware revenue is the correct one for Amino. This will de-risk Amino, and enable a greater focus on transforming the Group, both organically and through the opportunities to act as a consolidator in our market,' the company said.
The company proposed a full year dividend of 7.32p per share, an increase of 10% on 2017.
'The macro-economic headwinds that constrained trading in the second half of 2018 have continued into the early part of 2019. Memory prices are showing early signs of decreasing and the rate of price increases of MLCCs is slowing,' the company said. A healthy pipeline of sales opportunities in our core markets underpins our confidence in our long-term strategy and focus.
'Whilst our transformation programme means a focus on higher quality, recurring revenues from software and services, in the near term the exit from low margin hardware revenues is expected to reduce revenues by 21% in 2019.'
We therefore expect profits to be approximately 10% lower than 2018 levels, albeit at better margins. With a robust balance sheet, strong cash generation and a compelling opportunity in the pay-TV market, we remain confident in the long-term strategic direction and future of the Company.'
At 9:49am: (LON:AMO) Amino Technologies PLC share price was -16.5p at 91.5p