'Disappointing': SMS earnings plummet 45%

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'Disappointing': SMS earnings plummet 45%

SMS Management and Technology has shrunk in revenue, earnings and net profit after a tough year in which its chief executive was shown the door.

The public company announced Tuesday total revenue of $328.7 million for the 2016 financial year, 8 percent down from last year's $356.2 million.

EBITDA plummeted 45 percent to sink to $15.7 million, a far cry from the heady days of 2012 when it hit $44.3 million.

Net profit for 2016 was at $9.7 million, down 43 percent from last year and miniscule compared to $30.6 million harvested in 2012.

SMSMT chief executive Rick Rostolis (pictured) acknowledged that, while the results met the guidance provided to the market in May, there was much room for improvement at the company.

"The performance of our SMS consulting business in 2016 was disappointing, impacted
by a number of factors that saw a significant slowdown in contract wins and revenue," he said.

The underperformance of the consulting arm was also a striking theme on 2 May when previous chief executive Jacqueline Korhonen departed after a shock resignation. The company revealed at the time the consultant workforce was slashed from 920 to 820 in the second half of the financial year.

The full year report added Korhonen's termination costs, totalling $700,000, to the list of reasons company blamed its poor performance on.

Other factors, according to SMSMT, included a "national sales and delivery" restructure implemented on 1 July 2015 that "caused significant disruption to sales effectiveness", a large client pullout, unsuccessful bid costs for managed services contracts and a slowdown in the Western Australian market.

In response to the turmoil, SMSMT's share price has sunk in recent months. The company hit $5.41 in October last year, but the price had dipped to $1.93 as of 10:16am Tuesday.

“It has been a challenging year for SMS. We have expended considerable effort in recent weeks initiating actions to stabilise the business in order to restore growth," said Rostolis.

"These actions have included an alignment of our sales and delivery teams on a regional basis to drive deeper engagement with clients, particularly in the Advisory and Solutions business. We have also expanded our national capability development team to broaden and enhance our service offerings and strengthen delivery management."

SMS Management and Technology was established in 1986, and now has offices in every mainland state capital plus Canberra, Hong Kong and Singapore.

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