Focusrite defers interim dividend amid coronavirus pandemic

Audio technology company Focusrite reported a rise in revenue in its half-year results on Tuesday, to £49.9m, from £40.4m a year prior.

The AIM-traded firm said its adjusted EBITDA improved to £9.1m for the six months ended 29 February, from £8.9m in the first half of the 2019 financial year, while its adjusted operating profit slipped to £6.4m from £7.3m.

Its adjusted diluted earnings per share totalled 9.3p, down from 11p, as the board declared no interim dividend for the period, compared to a 1.2p distribution 12 months ago.

At the end of the first half, Focusrite had net debt of £19.9m, swinging from net cash of £26.2m in the first half of 2019.

On a statutory basis, Focusrite’s operating profit fell to £3m from £7.3m, while its basic earnings per share were down to 3.6p from 11.1p.

Looking at its operations during the period, Focusrite noted the acquisition of Martin Audio in December for £39.6m, and added that the integration of ADAM Audio was progressing well, and contributing to both revenue growth and profits.

It said consumer demand remained strong across the Focusrite and Novation ranges, although revenue was down slightly on a like-for-like basis, due to the initial impact of the Covid-19 coronavirus pandemic in China during the period.

The company’s gross margin improved to 46.1% from 44.3% year-on-year.

Focusrite said its interim dividend decision was being deferred at the current time, in view of the uncertainty caused by the ongoing pandemic.

“We are delighted to have acquired Martin Audio in December, adding another complementary high quality business, following on the heels of our acquisition of ADAM Audio in July,” said chief executive officer Tim Carroll.

“That was closely followed by the Covid-19 pandemic - we have managed the challenges well and I salute the whole team.

“As a result of their agile management of the situation, the impact of supply chain issues as a result of Covid-19 was limited to approximately £2m of revenue in February 2020.”

Since the half year, Carroll said consumer demand for Focusrite and ADAM Audio products had been high, especially via e-commerce, with the company seeing record levels of product registrations at Focusrite, indicating positive sell-through to end-users.

“Manufacturing in China is back up to speed and we are working hard to ensure that consumers can still get the product they wish to buy without delay.

“Demand for Martin Audio products is being affected by the lack of live music events due to Covid-19, but we believe this will recover in time.”

Carroll said Focusrite’s workforce was adapting to the “unusual” working conditions, supported by its IT and communications facilities that enabled working at home.

“We are confident that the Group will come through this upheaval stronger than ever.

“However, for the time being we must remain appropriately cautious given the unprecedented circumstances in which we all find ourselves.”

At 1113 BST, shares in Focusrite were down 3.33% at 580p.