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Telit Communications back in full-year profit, gives positive outlook

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Machine-to-machine (m2m) communications specialist Telit Communications PLC (LON:TCM) swung to a profit in the full-year to end-December 2010 and posted a 48.2 percent rise in revenues to US$131.7 million.

The group reported a pretax profit of US$6.4 million compared with a loss of US$4.1 million previously.

Following a year in which the company saw strong organic growth and a return of growth to the m2m industry which is emerging from the economic downturn, it bought Motorola’s (NYSE:MSI) m2m arm for US$23 million. The deal was completed in early March.

Chief executive Oozi Cats said: “Our hard work over the past few years at building a market leading platform to capitalise on the exciting opportunities within the m2m market is paying off and we are encouraged by the fact that Telit has continued to increase its market share in 2010. 

“We are very excited about the opportunities this significant acquisition will deliver and the Board is confident that Telit is now even better placed to achieve its objective of becoming the leading provider of m2m solutions worldwide."

Telit has reduced its net debt to US$7.2 million at the end of 2010 from US$10.4 million a year earlier.

The integration of Motorola m2m is progressing well and in line with management expectations.

Chairman Enrico Testa said: “The outlook for the rest of 2011 and the future looks very positive for the m2m industry as a whole and for Telit in particular. Our marketplace has returned to the robust growth rate it experienced before the economic downturn.”

Northland Capital commented on the results in its ‘Morning Report’, saying Telit’s strong performance comfortably beat the broker’s top and bottom line forecasts translating into a lower year-end net debt.

It is maintaining its ‘outperform’ rating on the stock and a 125 pence price target.

“Management believes it continues to win a larger percentage of available designs than its revenue market share and hence should continue to grow faster than the market. Motorola has brought some technology, an installed base of customers and removed a competitive threat,” Northland added.

Quick facts: Telit Communications PLC

Price: 128.4 GBX

AIM:TCM
Market: AIM
Market Cap: £167.19 m
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