Empired tips increased earnings

28/11/2019 - 15:49

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Empired shares have risen more than 8 per cent today after the IT services provider forecasted an increase in net profit and earnings per share for the current financial year, on the back of a $200 million pipeline of multi-year contracts to contest.

Russell Baskerville says the company focused on reducing overheads and capital expenditure.

Empired shares have risen more than 8 per cent today after the IT services provider forecasted an increase in net profit and earnings per share for the current financial year, on the back of a $200 million pipeline of multi-year contracts to contest.

The company said it had forecasted a strong EBITDA for the year, estimated to be between $8.3 million and $8.8 million in the first half, with operating cash flow to EBITDA expected to be around 85 per cent.

Empired said its overheads for the year would likely be reduced by around $3 million, compared to FY19, following a cost reduction program undertaken in the first half.

It has also forecasted capital expenditure of around $2.5 million for the first half, reduced by $3.1 million, and on track to be down by around $6 million at the end of FY20.

Empired managing director Russell Baskerville said the company was pleased with the guidance.

“At the full year, we discussed a focus on reducing overhead costs, capital expenditure and cash flow; we believe today’s guidance sends a clear message that this plan is on track,” he said.

“We are delighted that we have been able to secure a number of new managed services contracts and we remain highly focused on a number of material contracts over the coming months.”

Empired said it expected most of its growth in New Zealand, up by around 15-20 per cent in the first half, while revenue in Australia would likely remain down as the company exits its $75 million ICT contract with Main Roads Western Australia.

The company recently secured a five-year IT supply contract with Rio Tinto, along with new managed services contracts expected to deliver around $5 million per year, which Empired said would replace revenue lost through the Main Roads contract.

Its shares were up 8.2 per cent to trade at 33 cents per share, as at 3:55pm AEDT.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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