StockMarketWire.com - Spirent Communications said adjusted operating profit rose 27% to $58.9m in the year to 31 December 2017.

HIGHLIGHTS

- Strong growth in earnings and cash generation

- During 2017 we established a firm platform to realise Spirent's potential, focusing on specific growth objectives whilst ensuring our cost base is efficient

- As expected, revenue level year-on-year, up 2.4% excluding Connected Devices

- Growth of 100G high-speed Ethernet testing slowed during the year in anticipation of 400G, build up expected in H2 2018

- We have a market-leading position in 400G with equipment manufacturers and service providers

- Strong performance from our areas of strategic growth priority - Lifecycle Service Assurance revenue up 10% and Application Security business up more than 20%, improving group gross margin

- Connected Devices - robust turnaround delivered, with significantly improved profitability, despite revenue decline

- Adjusted operating costs reduced by $16.7m, excluding foreign exchange

- Adjusted operating margin up from 10.2% to 13%

- Strong cash management, free cash flow $56.4m (2016: $25.9m)

- Adjusted basic EPS up 43% to 7.55c

- Tax benefits from US reform - 2018 estimated Group effective tax rate of circa 17%

- Special dividend of 5c per share, in addition to an increased final dividend of 2.4c per share, to be paid May 2018

OUTLOOK

Key strategic wins secured in 2017 demonstrated traction in our key focus areas: active test and assurance in operational networks and in cyber security.

The demand for high-speed Ethernet, particularly in 400G, is expected to rebound later this year.

We expect that our 2018 results will once again be weighted to the second half, owing to our normal seasonality, but amplified by two additional factors.

The first is the expected rebound in Ethernet testing in the second half and the second is the expectation that Lifecycle Service Assurance spending is likely to be second half weighted after the heavy spending flourish at the end of 2017.

The stronger growth anticipated in our areas of strategic focus is expected to drive the performance of Spirent again in 2018.

The Board is confident that the group will show progress in 2018 while continuing to focus on a balanced approach to operational efficiency and investment in product development in its core growth businesses.




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