Focusrite set to report solid full-year growth

Music and audio hardware specialist Focusrite said in a trading update on Thursday that, even with adverse market conditions, especially in the Asian region, it saw significant growth compared to its performance before the pandemic.

The AIM-traded firm said it sustained its robust market position, launching 28 new products in the year.

Among those, the most noteworthy was the introduction of a new generation of the market-leading Scarlett audio interface range on 31 August.

The board said its content creation sector showed promising signs, with brands in the division rebounding to growth in the latter half of the 2023 financial year, outdoing their performance in the second half of 2022.

At the same time, the audio reproduction division continued its upward trajectory, showing growth by a double-digit percentage.

The directors confirmed that overall revenue for the group during the second half marginally surpassed the figures from the corresponding period in 2022.

As a result, anticipated group revenue for the full year was projected to be at least £177m - a slight drop from the £184m reported in 2022.

However, boosted by improved gross margins, EBITDA for the year was set to hover around the lower end of current market predictions, which stood between £38.2m and £39m.

Looking at its financial standing, Focusrite said that on 31 August, it had net debt of around £1.5m, widening from the £0.3m it recorded at the end of 2022, but a considerable narrowing from the £13.2m reported in the first half.

One of the critical factors for the debt was the acquisition of Sonnox last December, which amounted to a net cash consideration of £7.2m.

Working capital saw a substantial improvement during the latter half of the year due to an expected decrease in inventory levels.

“We are pleased with our full-year results and the strategic progress the group is making against the background of extremely challenging trading conditions throughout the year,” said chief executive officer Tim Carroll.

“Our fourth generation of Scarlett has been launched to critical acclaim, and well received in the sales channel, reflecting the investment and innovation which have made this product the market leader.

“Inventory in the channel for our Content Creation brands continues to unwind with levels returning to historic norms as we approach the winter holiday season.”

Carroll said the firm’s audio reproduction businesses continued to show good growth, reflecting the returning demand for live sound and events across the globe.

“We remain mindful of current industry-wide macro-economic factors, though we believe we are well placed to manage them accordingly.”

Focusrite said it would announce its audited final results for 2023 by the end of November.

At 1126 BST, shares in Focusrite were up 5.43% at 527.15p.

Reporting by Josh White for Sharecast.com.