Store Electronic Systems: Record Q3 Revenues
Edison | Nov 18, 2015 03:43AM ET
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Store Electronics (PA:SESL) reported a more than doubling in y-o-y revenues in Q3 on 212% growth in international sales and a 16% increase in French revenues. The results reflect strong H1 order inflows arising from the transformation of SES’s product range and its international expansion efforts. We expect SES’s new products to continue to gain traction, and major new orders in markets so far resistant to ESLs. Europe should fuel the bulk of this growth in 2016-17 as ESL penetration is still less than 10% in the region compared with c 50% in France and Norway.
Record Q3 revenues on trebling of foreign sales
SES’s Q3 sales release showed a 107% y-o-y increase in group revenues to €37.2m with international sales up 212% to €25.9m and domestic sales reversing their H1 decline to grow 16% to €11.3m. The numbers reflect the strong €123m in order inflows in 9M15, arising largely from demand for SES’s new-generation ESLs.
Operational leverage: Look for margins to widen
Management has guided that a higher than expected proportion of sales of new products means that full-year operating profit will be down on 2014 levels. This reflects the lower margins related to the still relatively small production runs of these items and the effect of the strong US dollar and ongoing international expansion outlays. We expect this margin pressure to ease as volumes of new products grow.
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