Touch screen tech firm Zytronic has fallen to a half year £900,000 loss and seen revenues drop by £1.2m following turmoil in the international gaming market.
The business, which has three factories in Blaydon which make systems for everything from ticket machines, information screens and video jukeboxes, has posted interim results for the six months ended March 31 in which group revenue dropped from £5.9m to £4.7m and it saw a pre-tax loss of £900,00, down from last year’s profit of £400,000.
Some of the drop related to some customers overstocking in the gaming and vending sectors last year, as a result of supply chain uncertainties that were prevailing in the electronic components markets. However, the issues were compounded in the gaming sector when, towards the end of the period, Zytronic customers were affected when their end customer Aruze Gaming America filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the State of Nevada.
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As well as expected low levels of sales in the financial market, it said sales in the period have generally been impacted across most markets, with the most sizeable impacts being in its top two market sectors of gaming and vending. Within gaming, sales were £600,000 lower than the same period last year, with reported sales of £1.5m, while vending was £400,000 lower, with sales of £1.5m, impacted by a £500,000 reduction in revenues for touch sensors supplied for a US-based customer’s drinks fountain due to FY2022 product overstocking.
The board is not proposing the payment of a 2023 interim dividend.
Over the course of the period, Zytronic saw the early retirement due to ill health of its chair, David Buffham. Mark Cambridge was then temporarily appointed as acting executive chair, to provide continuity and Mark Butcher then was appointed as interim chair at the firm’s AGM.
Mr Butcher said: “Having been confident in December 2022 that the group was positioned for progress, it is disappointing to report these results for the 6 months to 31 March 2023. As recently announced on 4 May 2023, we have downgraded our expectations for the full year even though there remain encouraging signs reflected by the increase in the number of open opportunities in our pipeline.
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"As a board we are working on a number of initiatives to address the headwinds the group is currently facing so that the group may return to revenue growth and profitability as soon as practicably possible.
“The headwinds caused by the noted effects of the overstocking and Chapter 11 event are expected to remain to the end of the financial year. The positive resumption of business development activities and the group’s board restructuring with the future chair appointment, together with other initiatives being pursued, are expected to help position the group more favourably for a future return to growth.”
Shares dropped 8% in early trading to 92p.
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