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Syft sales jump more than 50%, profit growth misses target on production costs

Friday 20th April 2018

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Syft Technologies, which makes gas detection and analysis products, says sales rose more than 50 percent in its latest year, which was lower than forecast and profit growth also missed its target because of increased production costs.


Sales in the year ended March 31 exceeded the $8.3 million in revenue it reported for 2017, the Christchurch-based company said. Profit topped 2017's $1.15 million, but not by as much as expected, it said, without being specific.


"This rapid growth in sales has caused us problems in production that we need to address better," the company said in a statement on the Unlisted platform. "Manufacturing costs are up due to a combination of new products, new staff, and poor inventory control. These are addressable but require a greater focus and mindset change to make the transformation to a much larger business."


Syft has "spent significantly more money on production development than expected, and development in general as we fix up issues that are slowing production," it said. "This work has also meant we have not had the development resource to make the progress on new initiatives we anticipated, and as a result, production costs will be higher than forecast in FY2019. The net result of these differences is a profit figure, while higher than last year, is lower than forecast."


Managing director Doug Hastie was out of the country and a spokesperson wasn't immediately available to answer questions. In September, the company raised $7.5 million selling 6.5 million shares via a placement at $1.15 apiece. The stock last traded at $1.13.


Costs of the capital raising contributed to a first-half loss of $40,000 from a year-earlier profit of $779,000 as sales rose to $4.8 million from $4.4 million.


The company's core product uses sensors to sniff out contaminants in the air, even in minuscule amounts. It also has technology for the environmental industry to monitor potentially harmful gases, and rapid trace analysis for high-precision technology manufacturing equipment, which can be damaged by contaminants in the air.


Syft said today that full-year sales missed its forecast because of the timing of an order in April rather than in February as expected. Average sales price rose 21 percent, meeting the company's target and the gross margin rose, although not as much as expected. The company's sales team "increased significantly from last year, but not as quickly as planned."


"While we never have complete certainty of future sales, due to the nature of our business (ie large capital items) we see significantly more prospects and activity which bodes well for this financial year," it said.


Founded in 2002 by the University of Canterbury's commercialisation arm, the company churned through $29 million of investors' cash in its first decade without producing a profit. The firm has recovered from bankruptcy in 2012.



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