Alterian blames weak UK recovery for loss

Alterian, the marketing technology group, blamed a weak recovery in the UK and a contract delay in the US for its move into the red in the year to March.

The company, whose software allows companies to monitor social media and manage online ad campaigns, released two profit warnings in April, sending its share price down 40 per cent. The first of the warnings prompted the departure of David Eldridge, the chief executive.

“In general the recovery in the economy is much weaker in the UK than it is in America,” said Keith Hamill, chairman. “General capital and investment spending in the UK is not recovering very fast.”

UK sales dropped 16.6 per cent to £14.1m ($22.7m), while the US figure rose 10.9 per cent to £16.9m.

Alterian reported a pre-tax loss of £4.4m, against a £6.7m profit in the previous year.

Acquisitions and new product launches, which pushed up operating costs without a corresponding contribution to revenue, had contributed to the poor results, Mr Hamill said.

Alterian was also hurt by a delay in agreeing a contract with a big unnamed customer in the US – a reflection of flaws in the company’s business model, which relied heavily on the software industry’s traditional surge in sales in the spring, he added.

Mr Hamill said the company would seek to increase efficiency by scaling back its managed services or “cloud-based” operations, which it launched last year. “It was too rushed – a move of that nature needs a lot of planning and organisation,” he said.

The search for a new chief executive was continuing, he added, with the first round of interviews to be completed this week.

George O’Connor, an analyst at Panmure Gordon, noted the absence of “new news” on the appointment. “We expect shares to languish until there is greater clarity about this,” he said, adding that concern about a 32 per cent rise in operating costs had prompted him to cut his target price from 129p to 121p.

Analysts at Investec left their forecast unchanged, predicting a pre-tax profit of £2.2m in the current financial year.

Alterian reported a loss of 7.1p per share, against earnings of 12.5p per share in the previous year, on sales that fell from £38m to £37m. No dividend was declared.

The shares closed 2p down at 108.25p.