StockMarketWire.com - Frontier Smart Tech cut its outlook for the full year, citing challenging short-term conditions amid competitive pressures in Digital Radio and weaker sales in hardware products.

The company now expected to report for the full year: sales of approximately US$36.6m;  an adjusted earnings (EBITDA) loss of no worse than US$0.9m; and a trading EBITDA loss of no worse than US$1.5m.

The downbeat outlook comes as the company said the short-term trading outlook was 'challenging,' as forward bookings in second quarter of the year 'have been below plan and the Board now expects Digital Radio FY-2019 revenues to be c. US$33.1m (approximately 8% lower than market expectations).'

The company said it would introduce more aggressive pricing, which would see full-year revenues and gross margins likely come in below market expectations, though this should help to protect volumes, with gross margins expected to remain stable at about 40% this year and next.

'In Digital Radio, increased competition has had a negative impact on profitability, but the fundamentals of the business line remain solid. In the medium-term, market volumes are forecast to grow, driven by increasing sales in Germany and the emergence of new markets such as France and Belgium,' the company said.

Its legacy Smart Audio hardware business continued to 'disappoint' due to 'ongoing aggressive pricing of first-party smart speakers, which has constrained the market for products from third-party brands,' the company said.

'As a result, the Board now expects FY-2019 sales for Smart IoT of c. US$3.4 million - 37% lower than market expectations of US$5.4 million.'

'In Smart IoT, sales of our legacy Smart Audio hardware continue to disappoint - due to the aggressive pricing of first party products. As a result, Smart Audio revenues in 2019 are likely to be significantly lower than in 2018,' it added.




At 9:38am: [LON:FST] Frontier Smart Technologies Grp Ltd share price was -11.5p at 9.5p



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