Revenues down at Pace but efficiencies boost margins

Mike Pulli, Pace chief executive
Mike Pulli, Pace chief executive
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TV technology company Pace said its half year revenues were down after facing “challenging” financial conditions.

The ​Saltaire-based set-top box manufacturer saw a 5.3 per cent fall in sales to $1.08bn (£692m) for the six months to June 30.

Chief executive Mike Pulli said the drop, which was in-line with management expectations, was caused by currency impacts and decreased demand.

It comes three months after Pace was bought by US rivals Arris Group for more than £1.5bn.

Despite falling sales, Pace revealed a two per cent climb in gross profit to $250.7m.

Gross margin climbed 1.6 percentage points to 23.2 per cent.

Earnings before interest, taxes and amortisation (EBITA) rose 11 per cent to $118.0m.

Mr Pulli said Pace had achieved “solid” half year results.

He said: “As expected, revenue was lower than the comparable period as challenging economic conditions, the strength of the US Dollar and industry consolidation reduced demand in a number of regions.

“However, through a broader mix of revenue, improving supply chain effectiveness and continuing improvements in operational efficiency, the group has shown the flexibility to continue to deliver improved profitability and strong cash generation despite weaker trading conditions.”

Sales are expected to pick up in the second half of the year due to new product launches and “additional demand for existing products”, Pace added.

Revenue for 2015 is now expected to be in the range of $2.65bn to $2.72bn, while EBITA projections remained unchanged at around $255m.

No dividend will be paid in view of the group’s takeover Arris Group.

The merger of the two companies is “progressing in-line with expectations” and is expected to complete in the fourth quarter, Mr Pulli said.

In April, Pace and Arris announced the £1.5bn deal, which will safeguard 500 jobs.

Arris is expected to retain Pace’s Saltaire site as its UK location, but it is not yet known whether the brand will survive.

Pace said the transaction would allow it to grow further than it could as an independent business.

Yesterday, Mr Pulli said that the firm is making “good progress” with its strategy as a standalone entity while remaining focused on completing the merger.