RWS' profits leap after streamlining Moravia division

The language and intellectual property support service reported a profit before tax of £27.6m for the six-month period ended 31 March, up 51% compared to the same period last year, while revenue was 23% higher at £172.3m.

Andrew Brode, chairman of RWS, said: "RWS has delivered a strong first half with record revenues and profits, driven by our three largest divisions. We are particularly pleased with the improved performance at RWS Moravia, which has achieved both healthy top- line growth and strong margins through focused operational management."

Localization services provider Moravia, which was acquired in November 2017 and consequently had not contributed fully to interim results before, accounted for 41% of the group's revenues.

The division's reported sales increased by 36% to £71.1m and margins improved from 13.4% to 19.3% following operating structure simplification and cost cutting.

The board remain confident of achieving a record full-year result due to encouraging performances at the start of H2, a "strong" sales pipeline and further margin improvement at Moravia.

Analysts from Berenberg hiked their price target for the stock from 615p to 670p on the back of Tuesday's numbers, calling the results a "strong continuation" of RWS Holdings' growth story, even as they looked ahead to the company's results presentation for further detail on whether the Moravia division's margins were sustainable, the likelihood of further mergers and acquisitions and the outlook for margins in the IP unit.

"Overall, we remain highly supportive of RWS, given its long-term track record of growth, capital light business model and possible upside to future forecasts," said the note.

RWS Holdings' shares were down 2.15% at 592.00p at 0956 BST.