West Lothian's telecoms-focused Calnex Solutions dials up 'strong' H1 with revenue and profit up more than a third

Linlithgow-based Calnex Solutions has seen both revenue and profit jump by more than a third in a “strong” first half, with an analyst highlighting confidence in current full-year expectations.

The firm, which provides test and measurement products for the global telecommunications sector, has unveiled its unaudited results for the six months ending September 30, showing a 38 per cent year-on-year increase in revenue to £12.7 million, attributed to strong underlying growth and the impact of currency movements.

Underlying earnings before interest, taxes, depreciation, and amortisation (ebitda) was up by 40 per cent, with the Aim-quoted firm adding that the underlying ebitda margin was maintained in line with the prior period, “despite the challenging external economic environment”. Pre-tax profit jumped by 34 per cent to £3.1m, and basic earnings per share came in at 2.78p, marking a “solid” 36 per cent jump, while an interim dividend of 0.31p pence per share is to be paid next month.

Calnex also flagged that the half year saw £1.3m cash generated after the £2.3m net acquisition cash cost for the £3.5m acquisition of iTrinegy, a developer of test networks technology for the software application and digital transformation testing market, with integration progressing “as planned”, while a new network synchronisation product called Sentry is due to be launched in the second half, boosting its product offering for the cloud computing market.

Chief executive and founder Tommy Cook cheered Calnex’s “strong” financial performance and integration of the iTrinegy team in the period. He continued: “Whilst it is sensible to look to the future with a degree of caution given the continuing component shortages and global macro-economic challenges, the company's positive trading performance during the period and proven ability to manage component shortages underpin the board’s confidence that the group’s performance for [the full year] will be in line with market expectations… [We are] in a strong position to continue to benefit from the underlying long-term growth drivers in the telecoms and cloud computing markets.”

Cenkos analyst Ian McInally outlined a “buy” recommendation for the West Lothian firm, and praised its “continued strong trading” in the first half. “Calnex’s order book was very strong going into H2/23, and the order backlog is starting to unwind (easing of supply chain issues), providing confidence in current expectations for the year,” he added.