Zytronic upbeat on profits slump

Dec 12 2007 by Andrew Mernin, The Journal

TOUCHSCREEN maker Zytronic has blamed a lower demand in the ATM sector for a 7% slump in annual revenue and an almost 50% cut in full-year profits.

However the firm, which employs 190 people in Blaydon, said it was optimistic going into the new year as ATM sales return to normal levels and its new products continue to bear fruit.

The AIM-listed company saw turnover for the year to September 30 fall to £11.4m, down 7% from £12.3m in 2006.

Pre-tax profits at the firm dropped from £1.27m in 2006 to £0.64m this year while basic earnings per share more than halved from 7.8p last year to 3.7p this time. The company, which makes touchscreens and optical filters for electronic displays, said despite poor ATM sales it had performed well in other areas.

Chairman John Kennair said: “The reduced performance in the ATM sector masks significant progress in the rest of the business for the year.”

All areas of the group’s touchscreen business outside the ATM sector have shown substantial growth, with overall sales growth of 75% in the year under review.

Mr Kennair said sales in its Zypos product, which was launched last year and is used mainly in shop cash registers, had soared by 340% to 1.4m, while annual sales in its Zytouch touch sensors grew 27% to £2.2m.

In the ATM sector, the company saw a reduction in sales in the North American market due to “the reorganisation by two of our major customers of their manufacturing and inventory control systems.”

However, Mr Kennair said the ATM market was improving for the company. He said: “We are pleased that sales to our two major customers in the ATM market are returning to higher levels.” Meanwhile, executive director Mark Cambridge said the firm was gearing up to widen its global reach in 2008. He said 50% of the company’s new opportunities were in Asia – particularly in Korea and Taiwan – 28% in the US and 22% in Europe. The firm is also expected to be boosted by its new £4m manufacturing site at its Blaydon HQ.

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Zytronic in figures

£11.4m: Turnover in the year to September 30, down 7% on 2006.

£0.64m: Pre-tax profit, down from £1.27m the previous year.

3.7p: Earnings per share, compared to 7.8p last year.

50%: Proportion of the company’s new opportunities that are in Asia.

£14.2m: Predicted annual revenue for 2008, as forecast by broker Brewin Dolphin.

Turn the page to read highlights of Zytronic's financial report and analysis from broker Brewin Dolphin.