Tekmar Group Reports Improved Margins Despite Revenue Decline in FY24 Results
Why we think this is neutral
Tekmar Group's FY24 results present a mixed picture. On the positive side, the company has significantly improved its gross profit margin from 23.3% to 32.1%, and increased its Adjusted EBITDA from £0.6m to £1.7m. These improvements demonstrate the success of the company's profit improvement plan. However, revenue declined by 8% to £32.8m, and the company is still reporting an operating loss, albeit reduced from the previous year. The order book remains relatively stable, but slightly lower than last year. While market conditions are described as improving, the company expects EBITDA for FY25 to be consistent with FY24, suggesting limited near-term growth. The ongoing legacy defect notifications also present a potential risk. Given these factors, while there are signs of operational improvement, the overall financial health and growth prospects of the company remain uncertain, leading to a neutral outlook.
Key Points
- Revenue decreased 8% to £32.8m
- Gross profit margin improved to 32.1% from 23.3%
- Adjusted EBITDA increased to £1.7m from £0.6m
- Operating loss reduced to £3.8m from £7.9m
- Net debt position of £1.6m at year-end
- Order book of £16.4m as of January 2025
- Expectation of consistent EBITDA in FY25 compared to FY24
- Ongoing legacy defect notifications present potential risk
- Market environment described as improving
- Focus on organic growth and M&A opportunities for future scale
Summary
Tekmar Group plc, a provider of technology and services for the global offshore energy sector, has released its final results for the year ended 30 September 2024. Key highlights include:
- Revenue decreased by 8% to £32.8m (FY23: £35.6m)
- Gross profit margin significantly improved to 32.1% (FY23: 23.3%)
- Adjusted EBITDA increased to £1.7m (FY23: £0.6m)
- Operating loss reduced to £3.8m (FY23: £7.9m)
- Net debt position of £1.6m as of 30 September 2024
- Order book of £16.4m as of January 2025
The company's financial performance shows improvement in profitability metrics despite the revenue decline. Management attributes this to successful execution of the Group's profit improvement plan. The market environment is described as improving, supporting sustained demand for Tekmar's technology and engineering services. However, the company expects EBITDA for FY25 to be consistent with FY24, indicating limited near-term growth expectations. The ongoing legacy defect notifications present a potential risk that investors should monitor.