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Legend sights bright side to floods

Rebuilding of infrastructure in Queensland and Victoria likely to impact positively on the memory manufacturer

Memory and semiconductor manufacturer Legend Corporation (ASX:LGD) is one of the first Australian IT companies to signal that it stands to benefit from infrastructure rebuilding efforts following January’s floods.

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In an ASX results statement for the half year to 31 December, the company said investments in business development, marketing and product development were also contributing to a positive full financial year.

“Legend is well placed for the remainder of FY2011 and beyond,” the statement reads. “The rebuilding of infrastructure in Queensland and Victoria is likely to impact positively on Legend’s earnings.”

For the December half year the company reported 23 per cent growth in net profit after tax to $4 million, while earnings before interest and tax grew nine per cent to $6.2 million.

The company reported it had managed to halve its net debt from $8.1 million as at 30 June 2010 to $4.1 million in the half to 31 December.

The company describes the numbers as the highest half-year result since listing in 2004.

Revenue at Legend’s memory modules and semiconductor business was down 18 per cent on the previous half, but improvements in profit margins resulted in a three per cent improvement to operating profits.

The company’s electrical, data and communications business reported operating profit growth of 26 per cent, and revenue growth of nine per cent on the previous half.

Despite the positive short-term outlook the company warned that, due to changes at a major client, sales of memory modules and semiconductors may not continue at present levels in two to three years.

“The strong mining and energy markets combined with an improving building segment are expected to lean to increased demand for the products of the electrical, data and communications business segment,” the statement reads.

The company is also exploring acquisition opportunities.

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