Salmat profit has almost surged for the half year despite revenue slipping to $196.3m, down 4.1 per cent from $204.6m for the prior corresponding period (pcp), with the company citing its cost management.
Underlying earnings before interest, tax, depreciation and amortization (EBITDA) for the H1FY18 was $11.9m, growing by 13.3 per cent from $10.5m the year before and up 43.4 per cent on H2FY17. Salmat says the rise in earnings was due to improved margins from new business as well as the company’s continued cost management.
The company attributes the drop in revenue to the gap left by lost clients and the impact of catalogue volume decline, with new business and increased discretionary spend failing to make up for it. In the past half, the company saw a drop of $21.3m in revenue from lost customers and $2.7m in underlying EBITDA.
Rebecca Lowde, CEO of Salmat says, “Revenue growth is a key focus for Salmat. While we have made great strides in cost management, net operating cash inflow, earnings and net profit, we continue to face new business challenges and we are working to address these as an immediate focus. Looking at our longer-term options for delivering value to shareholders, the strategic review currently underway is now well advanced, with some actions already taken.”
[Related: Salmat appoints new CEO]
Underlying profit before income tax was $5.3m, surging by 112 per cent from $2.5m in the pcp. Net profit after tax was $2.1m, up by 75 per cent from $1.2m. Salmat says significant items had a net impact of $2.2m, following restructuring costs and costs associated with the strategic review process.
Salmat produced 2.21 billion catalogues in the last half, 5.2 per cent down from 2.33 billion in the same period the year before. Salmat says catalogue volumes stayed steady but mid tier and small businesses fluctuated as clients experimented with frequency and media. In contrast, the company reported 222.2 million messages being sent via email/SMS, growing by 3.2 per cent from 215.4m in the pcp.
The marketing solutions sector, which includes Salmat’s print media, produced a revenue for the half of $94.4m, dropping by 10.2 per cent from $105.1m in the pcp. EBITDA for marketing solutions was $9.4m, down 26.7 per cent from $12.8m in the pcp.
In the last half, Salmat sold its text messaging MessageNet for $15.3m and Interactive Services. Its multi-channel marketing service Fuse was discontinued during the period. Last year, the company commenced an overhaul of the overall business, with one of their moves being launching the Salmat App to track catalogue distribution. Salmat says it is considering options for other businesses within both its Marketing and Contact Solutions sectors, as it continues its strategic review.
Lowde says, “We are committed to rigorously assessing all the opportunities on the table and delivering the best possible outcome for shareholders.”
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