Pre-tax profits at Irish mobile technology company Zamano sunk by almost a third to €794,000 in the opening half of the year despite an 80% surge in sales during the period.
The Dublin-headquartered company saw its pre-tax profits fall from €1.15m, while profit after tax decreased by 33.8%.
This was despite revenue climbing to €18.75m in the opening six months of the year compared to €10.4m in H1 2015.
Commenting on what he described as “mixed” results, Zamano acting chairman Colin Tucker said a “changing sales mix”, allied with an increased advertising spend, attributed for the fall in profits.
“While the overall trading outcome for the business was somewhat mixed during H1 2016, we can report a significant increase in both sales performance and cash generation,” said Mr Tucker.
“This was offset by falling margins due to increased investment in advertising, a changing sales mix in the UK and some foreign exchange headwinds.
“We anticipate an improvement in operating performance during H2 2016 thanks to H1 advertising spend and continuing strong UK sales performance.
“The 26% jump in our net cash position is very welcome as it provides us with a solid platform to implement our acquisition strategy.”
While the company’s sales rose significantly overall, the opposite was true of its Irish business where sales declined by 28.9% to €1.18m. The company again attributed this to changes in its product mix and advised that a number of old product lines were discontinued and replaced with a suite of newer interactive services. Gross profit in its Irish division declined by 39.3% to €320,000.
Zamano said that while Ireland “remains an important market territory” for the company, overall market conditions remain challenging.
The UK continues to make “a very strong contribution”, however, with sales more than doubling to €16.98m in the first half of the year.
Gross profit from its UK operations rose by 2.5% to €1.98m.
Mr Tucker said he expects the company’s overall fortunes to improve in the second half of the year as the impact of its increased advertising spend is felt.
“The fall in actual gross profits, taken with losses on currency translation, primarily relating to the UK, negatively impacted on ebitda [earnings before interest, taxes, depreciation, and amortisation], operating profit, profit before tax and profit after tax during the H1 2016.
“Sales revenue, however, continued to grow and this together with an increase in advertising spend should result in an improvement across all of these financial metrics during H2 2016,” Mr Tucker said.
Zamano continued to have an “active focus” on mergers and acquisitions and hopes to make significant progress in that regard in the second half of the year, Mr Tucker added.
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