IT contracting services firm FDM (FDM) said performance since its first quarter results was comfortably in line with its revised expectations outlined at the end of April.
Mounties (what the company calls its contractors) deployed client side as of the 15 June totalled 3,706, a slight contraction from the 3,802 in place at the end of April. ‘A robust AGM statement, but the data points suggest that FDM is downsizing,’ said analyst at broker Stifel today.
Shares in the £911m, FTSE 250 business rose 2.3% to 874p, roughly in line with the market’s advance.
RESHAPED COSTS
What should be clear is that FDM’s push to streamline its operating model, and focus on cash management, are feeding through effectively. Debt-free cash jumped by almost £9m to £53m as of mid-June.
That’s a very comfortable buffer and should mean that the company’s longer-term investment plans stay on track even if recovery is protracted or a feared coronavirus second wave emerges.
‘Whilst we would expect some activity to return into the back half of the year as restrictions are lifted, the nature of FDM’s recovery will be nuanced by its presence across multiple geographies,’ points out Megabuyte analyst James Preece.
WHAT THE MARKET EXPECTS
Current market expectations for full year 2020 anticipate a 19% fall in operating profit to £43.2m on revenues of £256m, 6% lower than 2019.
But Stifel has trimmed its own 2020 estimates to £45m of adjusted pre-tax profit from £248.3m revenue.
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