December 8, 2010 6:32 pm

Emerging markets boosts Zytronic

Increasing use of ATMs in emerging economies helped Zytronic, the Aim-quoted manufacturer of touch sensors and optical filters for electronic displays, to strong sales and profits growth and a 40 per cent increase to 7p (5p) in full-year dividend.

In a record year, pre-tax profit rose 27 per cent to £2.9m (£2.3m), ahead of market expectations, on sales up 16 per cent to £18.5m (£15.9m) in the year to September 30. Order intake was a record £19.8m ($31.3m), up 23 per cent (£16.1m).

Shares in Zytronic, which exported 90 per cent of output from its Tyneside factories, against 86 per cent the year before, rose 20p, or 11.63 per cent, to 192p.

The company has 37 representatives in 39 countries, an expanding network that supported growing sales in countries including China, India and Brazil and contributed to a 36 per cent increase in sales of optical filters to the ATM market during the year.

New touch sensor developments helped boost the volume of units sold by nearly 11per cent over the previous year. In value terms, touch sensor sales, 6 per cent down in the first half, recovered in the second half to finish 2 per cent ahead for the full year. Increased sales in the self-service and kiosk markets helped offset softening both in the gaming market and in sales to ATM customers demanding high-end touch-operated machines for Europe and North America.

Zytronic touch technology products gaining popularity include the Blockbuster Express branded DVD tending kiosk throughout North America and Coca-Cola’s new Freestyle drinks fountain. New gaming projects in the second half helped offset continuing downturn in demand from some established customers in this recession-hit market.

Gross margin dipped to 32 per cent (34 per cent). The company maintained its annual research and development expenditure, described by Mark Cambridge, chief executive, as “key” to its growth and prospects, at about £400,000.

Net cash inflow from operations was £3.8m (£3.1m); gearing reduced to 11 per cent (31 per cent). Fully diluted earnings per share rose 28 per cent to 14.8p (11.5p). House broker Brewin Dolphin increased its current year pre-tax profit forecast to £3.2m, from £2.8m.

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