Horizon profits up, sales down
No upturn in short term
Horizon, the Irish-based Irish systems integrator and distie, has posted lower revenues for the first six months of the year, although cost-cutting boosted profitability.
For the first six months of 2003 the company produced turnover 128.52 million, a marginal increase from the €128.48 million posted in the previous six months. A year ago, the company's revenue was €193 million, about 33 per cent higher than this time around.
The year-on-year fall can partly be chalked up to Horizon's decision to exit a number of businesses during the year, including its Web consultancy, IT training and application service provision arms. Horizon now focuses on two broad areas: selling IT equipment via its Clarity Distribution operation, and providing IT services through its applications consulting business.
"There is no question that business turnover has fallen year-on-year, but in the six month to 31 June, we believe it [Horizon] has reached a base in terms of revenue," said Barry Dixon senior analyst with Davy Stockbrokers.
Horizon's first half gross profit was €14.91 million, down from €15.32 million in the previous six months and €24.49 million in the same period last year. Trading profit before goodwill, at €3.29 million, was up 3.62 per cent sequentially and up 28 per cent from the same period last year. This figure was also about 16 per cent higher than analyst forecasts.
"Although the market has become less volatile, IT spending shows no sign of significant improvement in the short term," said Samir Naji, chairman and chief executive, in a statement. "Unit volumes and services delivered will show reasonable growth but as a result of productivity improvements and reductions in vendors margins, market revenue growth will be marginal, if any."
The company attributes its half-year profits growth to cost cuts, including a 5.7 per cent cut in staff costs, although it says that headcount was relatively stable during the period.
Horizon reports a substantial fall in sales at its Enterprise Solutions Division, at €71.9 million for the half year, down more than 45 per cent year-on-year. This division helps customers implement IT strategies by providing IT equipment and through development and consulting services. The company blames cuts in corporate spending in the UK to this fall.
In addition, liabilities resulted from the sale of Horizon's Cisco training business and the restructuring process, but group said its making moves to sublet or dispose of a number of its facilities to recoup the expenses. Horizon expects to reap an annual cash inflow of €1 million, which will cut the annual cost of its vacant properties to €1.9 million.