Slower market

Calnex falls to loss as customers delay investment

Tommy Cook of Calnex
Tommy Cook: we anticipate a return to growth

Calnex Solutions, the Lothian-based provider of telecoms testing gear, plunged to a full-year loss as a slowdown in the market led to revenue falling by almost a half.

Customers delaying investment was the main cause of a £384,000 pre-tax loss in the year to the end of March against a £7.2m profit in the previous 12 months. Revenue fell by 41% to £16.3m from £27.5m.

The stock market quoted company, which operates from Linlithgow, said it had a closing cash position of £11.9m and is refocusing its engineering programmes on areas of the market showing near-term resilience and growth opportunities, such as cloud computing and defence.

Recently launched products are gaining traction, providing confidence in a return to growth in FY25.

The company has proposed a final dividend of of 0.62 pence per share, making a total of 0.93 pence per share for FY24 (FY23: 0.93 pence).

Cloud computing and data centre markets represent a growing opportunity, based on the increased data centre infrastructure investment and testing required to support the increasing demand for AI and virtual reality-based applications.

But challenges across the wider telecoms market are expected to remain for the duration of the year but the fundamental long-term need for telecoms testing solutions remains unchanged.

The company said longstanding customer relationships across all territories leave it :”well positioned” to convert its telecoms sales pipeline once the trading environment improves. 

Tommy Cook, chief executive and founder of Calnex, said: “We have successfully expanded our new product development programmes to focus on near-term growth channels – specifically the development of new capability in the telecoms market … as well as our product launches to capitalise on the increasing demand in the cloud computing and data centre markets.

“Our recent product innovations are gaining traction and we anticipate a return to growth in FY25, notwithstanding the challenges in the telecoms market which are expected to remain for the duration of this year.

“The fundamental drivers that underpin the build out of the mobile network and the expansion of the data centres and cloud computing capacity have not changed, and our longstanding customer relationships across all territories leave us well positioned to convert our telecoms sales pipeline once the trading environment improves.

Our healthy balance sheet will enable us to weather these uncertainties, providing the board with confidence in the medium – and long-term future of Calnex and in our ability to deliver for our customers, team, and shareholders.”

Analysts remain bullish about the longer term prospects of the company. Canaccord Genuity has set a target price of 15p, while Cavendish says Calnex is “firmly placed for a strong recovery” and has set a target price of 103p.

Shares in Calnex Solutions closed 7.5p (12%) lower at 55p.



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.