CSG sees profits plummet

CSG sees profits plummet

While New Zealand revenues decline

Julie-Ann Kerin – CEO, CSG

Julie-Ann Kerin – CEO, CSG

Managed print solutions provider, CSG (ASX:CSV), has reported a net profit after tax (NPAT) declined 136 per cent to a $3 million loss, with underlying NPAT down by 83 per cent, reporting $1.4 million, for the six months ending 2017.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was down 67 per cent year-on-year for the period, posting $4.6 million, according to the company's latest financials.

At the same time, the company saw its total revenues decline by three per cent, as previously announced, for the six months ending December 2017, according to the half-yearly financials.

Total revenue for the period ending 2017 was $117.2 million, with Australia revenue at $58.6 million and New Zealand slightly higher at $58.6 million.

Looking at both countries separately, Australia showed narrow growth year-on-year, with $1.3 million more in the latest reporting period, whereas New Zealand showed a decline in revenue of $4.8 million.

A seven per cent decline in the Business Solutions segment, meanwhile, was attributed to lower than expected equipment sales.

The company told shareholders on 21 February that print equipment revenue was impacted by changes to the sales force and sales incentive programs to drive growth in the technology business.

However, CSG reported strong technology sales with technology subscription seats growing by approximately 235 per cent in Australia and approximately 31 per cent in New Zealand.

“Although the financial results in 1H FY2018 are disappointing, CSG continues to execute against its strategic and operational objectives to become a leading technology-as-a-subscription provider in Australia and New Zealand,” CSG managing director and CEO, Julie-Ann Kerin, said.

“We are pleased with the strong growth that we continue to see in technology with high value subscription seats closing at 19,184 as at 31 December 2017, representing organic growth of 44 per cent relative to the prior corresponding period.

"We expect the technology business to represent approximately 25 per cent of revenue in FY2018 and we are confident that our technology-as-a-subscription strategy  has enormous growth potential.”

In Enterprise Solutions New Zealand, CSG saw growth in low value subscription seats in the education market through pcMedia Technologies, which the company acquired early 2017 for NZ$2 million.

For the second half the company plans to focus on growing the Managed IT services business and execute in the Digital Display business.

CSG announced earlier in the month that it had appointed Morgan Stanley to assist in reviewing strategic options available to the company in order to maximise value for shareholders.

For the second half of 2018, CSG has previously anticipated revenue in the range of $136 million to $143 million.

For 2019 the company plans to explore new geographic territories, grow contact centre practice to be a leader across Australia and New Zealand and investigate adding mobile and other add-ons to core bundles, among other initiatives.

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