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Telit Communications updates on automotive sale; finds further cost savings and is bullish on the outlook

"We are now a much leaner and more efficient organisation with a refocused go-to-market strategy for our internet of things services business," said chairman Paolo Dal Pino

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Telit is focused on machine-to-machine technology
Telit Communications Plc (LON:TCM) said it was working on the "smooth and fast" transfer of the automotive business to buyer TUS International as updated on trading and said it had found a further US$10mln of cost savings.
 
The two sides are currently awaiting elements such as sign-off by the Hong Kong Stock Exchange, the publication of a shareholder circular and approval from TUS investors ahead of the US$105mln sale of the Telit unit.

READ: Telit inks agreement with China Unicom to provide IoT solutions

In the same announcement, shareholders were told Telit continued to "trade well" with revenue growth in double digits and gross profit margins stabilised.
 
As such, turnover for the year just ending is expected to be in the order of US$415-$425mln, giving adjusted EBITDA in the range of US$30-$35mln.
 
"Most importantly, Telit remains on course to deliver a positive profit in cash in the second half of 2018 and going into the new financial year," said the 'internet of things' specialist.
 
The streamlining of the business to focus on 4G technology will lead to the aforementioned savings, while the company said it expects profitability and cash generation to be "significantly improved" in 2019. 
 
Chairman Paolo Dal Pino said: "The expected sale of our automotive division..will reinforce the company's financial position and support its future growth and strategic flexibility. 
 
"The core of the business has continued to trade well and in line with our expectations despite the operational and managerial changes during the year.
 
"We are now a much leaner and more efficient organisation with a refocused go-to-market strategy for our internet of things services business.  
 
"I am confident this will see both an upturn in revenue next year and a material increase in our cash generation."
 

Quick facts: Telit Communications PLC

Price: 131.2 GBX

AIM:TCM
Market: AIM
Market Cap: £174.54 m
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