AVEVA slides as earnings fall by over a third in first half

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AVEVA Group PLC (LON:AVV) shares fell on Thursday as the industrial software group saw a sharp drop in earnings in its first half due to the impact of the coronavirus pandemic on revenues.

For the six months to September 30, the FTSE 100 firm reported an adjusted pre-tax profit of £55.3mln, a 37.9% decline year-on-year, while revenues fell 15.1% to £332.6mln.

READ: AVEVA Group hit by contracts slippage

Despite the decline, the company said its results for the first half were “broadly in-line” with its plan for the shape of the year, although it did highlight that two-medium sized contracts had slipped into the third quarter from the second. The group also highlighted that recurring revenues as a percentage of the total have increased to 64.2% from 61.9% previously, with growth in three of its four business units. The company’s interim dividend was also maintained a 15.5p per share.

Looking ahead, AVEVA said its full-year performance is expected to be “resilient despite the challenging global economic environment” and that the order pipeline for the remainder of the financial year is strong and “underpinned by a higher volume of contract renewals, including major Global Account contracts, as well as the contracts that slipped from the second quarter”.

“As such, the board expects to see solid revenue growth in the second half and remains confident in its outlook for the full year”, chief executive Craig Hayman said in a statement.

“Given the [coronavirus] disruption, AVEVA has performed creditably in what has been a relatively tough trading environment in the first half, and against very tough comparatives. We continue to see solid demand from our customers for AVEVA’s software to help them digitalise and the long-term trend towards digitalisation of the industrial world remains very exciting. Our order pipeline for the remainder of the year is strong and we expect the group to achieve year-on-year revenue growth in the second half of the financial year”, the CEO said.

Hayman added that the company has “continued to make significant investments” including its acquisition of OSIsoft, which was agreed in August and remains on track.

AVEVA shares fell 3.4% to 4,265p in early trading on Thursday. 

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