Ferret's Stock to Watch: SALMAT LIMITED
07:45, Tuesday, 22 February 2005
TOP MARKETER COMMUNICATIONS GROUP PROFITS TO RISE AGAIN
Sydney - Tuesday - February 22: (RWE)Aust Business News)
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OVERVIEW
********
Leading direct marketing and customer communications operator,
Salmat Ltd yesterday reported a solid December half year result and is
now predicting a higher full year profit than previously forecast.
Joint managing director Mr Peter Mattick said: "Subject to the
normal caveats, we are confident of another strong full-year result.
"We expect our rate of revenue growth for the full year to
remain at close to first-half levels.
"In terms of full-year outlook, given the solid first-half
result, we now anticipate full-year net profit growth of 27 per cent to
32 per cent, higher than the previous guidance of 20 per cent to 25 per
cent provided at last year's AGM," Mr Mattick declared.
The group lifted net profit 35.2 per cent to $14.85 million in
the six months to December 31 from $10.98 million for the first half of
last year.
Revenues increased 8.2 per cent to $181.6 million from $167.8
million.
Earnings per share were 12.8c, up from 9.5c.
Interim dividend is up from 5c to 6.5c, fully franked, payable
on March 28 to shareholders registered March 7.
Joint managing director Mr Phil Salter said: "Our three
divisions have all increased their revenue and made a positive
contribution to earnings.
"We now occupy market leadership positions in all of our
businesses and this positions us well for future growth."
"We expect the SalesForce acquisition to be EPS-accretive in the
first year of operation.
At the beginning of December Salmat spent $64 million to acquire
SalesForce Australia Pty Ltd.
It described SalesForce as one of Australia's most successful and
dynamic call centres and direct sales organisations.
SalesForce was acquired from DDB Worldwide.
Last year SalesForce posted sales revenues of $92 million for the
year ended June 30 with EBITDA (earnings before interest, depreciation,
amortisation and tax) of $9.5 million.
This is likely to be an important factor in the better result for
the year.
SHARE PRICE MOVEMENTS
*********************
Shares of Salmat yesterday slipped 5c to $5.10. Rolling high for
the year has been $5.62 and low $3.45. Dividend is 12c to yield 2.32 per
cent.
Last November Salmat directors emphasised that the company
delivered on the commitments they made to shareholders for the 2004
results.
"On the revenue line, we forecast double digit growth and
delivered over 14 per cent.
"On the net profit line we forecast growth of between 20 per
cent and 25 per cent and we delivered 27 per cent.
"We forecast a turnaround in our call centre business and
delivered an early EBITDA positive result for the year.
In the year to June 2004 Salmat reported a profit after tax of
$21 million, a 27 per cent increase on the prior year's result.
This was on the back of a 14.5 per cent increase in revenues to
$327 million, sourced largely organically and not from acquisitions.
Return on capital employed of 47 per cent - a strong return by
any standard - confirmed that the company continued to use financial
discipline on capital utilisation.
BACKGROUND
**********
Salmat was established in 1979 by Philip Salter and Peter
Mattick, who saw the huge potential in Australia for direct marketing and
customer communications.
It listed on the Australian Stock Exchange on December, 2001
From small beginnings as a letterbox distribution network, the
company quickly expanded into a national operation and developed the
laser printing and direct mailing business.
Salmat continued to introduce new technologies and methods of
operation to Australia, and by the mid 1990s was market leader in the
disciplines of data management, document management, targeted
distribution and response management.
Salmat's next step was to enter the world of telecommunications,
setting up call centres for inbound and outbound teleservices.
In 1995, Salmat acquired Deltarg to offer letterbox delivery and
customer targeting services to the New Zealand market.
Salmat expanded into Asia in November 1996, establishing a joint
venture with Jardine Matheson, a Hong Kong listed conglomerate with
established relationships throughout the region.
The joint venture commenced operations in the Philippines, and
expanded to Taiwan in 1998 and Hong Kong in 2000.
Salmat acquired Jardine Matheson’s interest in the joint ventures
in August 2002.
In January 2001, Salmat, in a joint venture with ePLDT, opened a
new teleservices operation in the Philippines.
Leading US-based call centre operator, Service Zone, purchased
ePLDT's 51 per cent holding in July 2003.
ServiceZone has since been acquired by ClientLogic Corporation, a
leading international business process customer in the call centre and
fulfilment industry. The joint venture, ClientLogic Philippines, provides
a comprehensive range of call centre services for businesses operating
anywhere in the world.
Today, Salmat is one of Australasia's leading direct customer
communications companies, employing more than 1,800 people, with
operations in 18 offices across Australia, and internationally in New
Zealand and Asia.
Salmat operates through two business divisions – Business Process
Outsourcing and Customer Contact Solutions.
Business Process Outsourcing provides data management and
processing services.
This includes printing and mailing services, document design,
barcode addressing, data formatting, database development, data
management and segmentation, archival and retrieval, electronic bill
presentment and payment, and customer relationship management.
ENDS
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