Zytronic confident of adding £3m to its turnover

May 27 2010 by Chris Knox, The Journal

TOUCHSCREEN maker Zytronic is confident of adding £3m to its turnover by next year, despite seeing its half- year results increase by only 3% after sales of its newest model were affected by a downturn in the gaming sector.

The Gateshead firm, which employs 195 staff, said it had made only £140,000 from the gaming market during the six months to March 31, compared with £1m during the same period last year, as the industry shied away from investing in new automated betting terminals.

The company also saw a 1% increase in pre-tax profits to £1.06m during the period, with a weaker exchange rate also hampering growth. But Zytronic’s directors are confident of an upturn after seeing a 16% increase in new orders to £9.7m during the six -month period, including a deal with Coca-Cola to supply screens for the US launch of its Freestyle drinks dispensers.

It is also developing a series of six- inch screens for the white goods market at its recently opened Blaydon plant to make its new Zypos model, which will be launched between September and January next year.

In addition, it has seen an increase in sales of screens used in more hi-tech vending and ticketing machines, which are mainly used in the US and the Far East.

The company, which exports around 90% of its products, also said it had seen improved European orders of its smaller petrol forecourt screens and that a number of its banking clients were now ordering in the Zypos product after previous lack of investment during the financial crisis.

Such confidence saw the firm increase its interim dividend by as much as 67% to 2p as earnings per share grew by 4% to 5.4p.

Chief executive Mark Cambridge said: “Despite minimal growth in sales we have benefited from a number of strong new orders that have made up for a dip in the gaming industry.

“Also, these figures do not reflect the development of screens for Coca-Cola or our new white goods customers, which is why we expect a much better second half to the year and why we feel confident enough to increase our interim dividend to 2p.”

The new 20,000sq ft Zypos facility, which went into operation in January last year and employs 40 staff, recently received a £540,000 Government grant, which will go to reducing the firm’s gearing after it invested £1m in the site.

The company is now confident that it can match broker projections, which project its annual turnover growing from £15.9m to £18.7m by next year, and expects to create around 10 jobs over the next six months.

A brokers’ note from Brewin Dolphin said: “Zytronic’s results were solid in the first half, with a subdued gaming end market more than offset by the continuing progress made by Zypos in other new markets.

“The order momentum and activity that is due to be generated by the new Coca-Cola and white goods projects offer strong potential upside for Zypos in coming periods.”