SMS revenues grow but belt tightens

Beverley Head
Wednesday, 22 February 2012 11:27

IT Industry - Listed Tech

Listed IT services business SMS Management & Technology has turned in a decent set of numbers for its first half of the current financial year with revenues up 16.1 per cent to $169.5 million. But with net profits flat at $15.2 million the company has signalled some belt-tightening ahead as it seeks to strip $2 million of costs out of the business.

Chief executive officer Tom Stianos said that there would be some job losses and reassignments, although these would not affect billable front line positions. Mr Stianos said that a reorganisation engineered 18 months ago, which had been intended to boost sales, had achieved that but also introduced layers of complexity to the business.

According to Mr Stianos SMS would now seek to optimise the structure which might see some administrative or sales management roles made redundant. Some personnel may be reassigned into billable roles he said, although did not provide any indication of how many people would be affected.

The share market reacted well to the results - which also delivered shareholders a fully franked dividend of 13.5 cents - sending shares 3.11 per cent higher to $5.31 at time of writing.

By the end of December the company had just over 1,700 staff, but SMS today indicated that it expected this to fall back slightly during the current half year as it slowed up recruitment plans and natural attrition took hold.  While it was hiring in some markets, Sydney and Melbourne headcounts in particular were expected to remain flat.

As far as the outlook is concerned the company claims to have a healthy pipeline, although Mr Stianos acknowledged the patchy nature of demand.

While there was particularly strong demand in resources and utilities, continued business in ICT and transport, the financial sector had softened, although he said there were signs of a possible improvement.