Salmat has doubled its profit for 1HY18 from the prior corresponding period (pcp) despite revenue falling 4.1 per cent, with the company citing cost management.
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’s HY revenue for continuing operations is $196.3m, down from $204.6m in the pcp.
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 year, Salmat says it saw a drop of $21.3m in revenue from lost customers and $2.7m in underlying EBITDA.
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. EBITDA is also up 43.4 per cent on H2FY17. Salmat attributes the rise in earnings to improved margins from new business, and continued cost management.
Rebecca Lowde, CEO, Salmat says, “The results highlight Salmat has made great strides in cost management, net operating cash flow, earnings and net profit. We will continue to invest and innovate as part of our strategy to ensure long term sustainability. Our immediate focus is on driving new business across our Marketing Solutions and Contact Solutions segments.
“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.”
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.
Salmat says it is considering options for other businesses within both its Marketing and Contact Solutions sectors, as it continues its strategic review.
The company also debuted its new direct mail and catalogue tracking app in the HY, salmatHub, which lets marketers track their materials as they are delivered, while simplifying the delivery process for distributors
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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