Critical.
Authoritative.
Strategic.
Subscribe to CIO Magazine »

Melbourne IT expects underlying earnings lift

"Transformation" costs expected to affect EBIT by $5 million in 2011

Domain name registrar and IT services provider Melbourne IT Ltd expects underlying earnings to rise in 2011, after booking a lower full year net profit in 2010.

Melbourne IT on Tuesday booked a a 4.5 per cent fall in annual net profit to $16.06 million, pulled back by foreign exchange headwinds and a slower sales recovery in the United States and Europe.

Earnings before interest and tax (EBIT) fell nine per cent to $21.2 million.

Foreign exchange negatively affected 2010 EBIT by about $2.5 million.

Melbourne IT said "transformation" costs were expected to affect EBIT by $5 million in 2011.

"Nevertheless, the company believes 2011 EBIT will be line with 2010 once this investment and the continuing impact of the strong Australian dollar is absorbed," the company said in a statement.

"However, from an underlying growth perspective, Melbourne IT expects 2011 EBIT will be up approximately 15 per cent on 2010 before incremental transformation costs and the forecast foreign exchange impact are applied."

Shares in Melbourne IT had shed 13.5 cents, or 6.8 per cent, to $1.85 by 1210 AEDT on Tuesday.

Melbourne IT said continued growth from its enterprise divisions and the start of transformation benefits should help return the company to stronger 2012 EBIT growth.

Chief executive Theo Hnarakis said the underlying performance of Melbourne IT, on a constant currency basis using 2009 foreign exchange rates, was slightly better than 2009.

"Market conditions varied considerably across our businesses in 2010," Mr Hnarakis said.

"In Australia, there was strong demand for outsourced IT services among enterprises and government, while at the other end of the scale, there was clear evidence that small businesses were very price-conscious, lending weight to continued commoditisation of base services such as domain names and email services.

"Internationally, Digital Brand Services (DBS) experienced slower growth than anticipated as corporate spending in the US and Europe gradually recovered, while For The Record was hit hard by spending cuts across the US public sector.

"The good news is that economies outside of Australia continue to strengthen and opportunities for growth continue to increase, particularly for DBS where we are investing heavily in our sales capability to take advantage of these opportunities."

Melbourne IT's revenue for 2010 fell 5.1 per cent to $189.9 million.

The company declared a final dividend of eight cents, fully franked, steady with the dividend in the prior corresponding period.

The total dividend for 2010 was 15 cents per share, the same as in 2009.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: Melbourne IT

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
Users posting comments agree to the CIO comments policy.
Login or register to link comments to your user profile, or you may also post a comment without being logged in.
Related Coverage
Related Whitepapers
Latest Stories
Community Comments
Tags: business, financial results, Melbourne IT, services
Latest Blog Posts
Whitepapers
  • Managing IBM License Complexity
    IBM provides thousands of products in its portfolio and uses a variety of license models, contract terms and conditions. These license models can be very complex, causing frequent confusion for organisations trying to grasp the concepts while maintaining license compliance. While at first IBM licensing may seem incomprehensible, some education on the license models and licensing scenarios will help minimise the confusion. In addition, a more automated approach to managing licenses enables organisations to gain control, reduce ongoing software costs and minimise license liability risks. Read on.
    Learn more »
  • CIO Executive Council ROI
    This document was created by Council CIOs as a means to illustrate ROI for membership. It outlines the services available to member CIOs and their deputies.
    Learn more »
  • Essar Group - Essar Group executives enjoy printing on the move
    Essar Group’s senior management are constantly on the road. So it’s not surprising that the company has become a heavy user of mobile computing solutions to enable them to get their job done. The mobility and productivity of executives; enable them to easily print documents from any company location to any company printer using their smartphone. Read more.
    Learn more »
All whitepapers
rhs_login_lockGet exclusive access to Invitation only events CIO, reports & analysis.
Recent comments