Legend records profit increase despite revenue declines

Demand decreases in domestic industrial and commercial building markets

Semiconductor firm Legend (ASX:LGD) has recorded a 19.5 per cent year on year increase in net profit after tax to $2.2 million, despite a 9.4 per cent decrease in revenues to $43.5m for the half year to 31December 2009.

EBITDA for the company, which is best known for its memory modules, improved 3 per cent to $6.75 million, up from $6.55 million for the year on year half.

In an ASX statement, the company said the revenue result was due to reduced demand from industrial and commercial building markets in Australia and the global financial crisis which adversely impacted the company’s Cabac business.

Cabac designs, manufacturers, imports and distributes products to the electrical industry.

“A full recovery from the contraction in domestic demand is yet to be seen,” the statement reads.

The company said continued management of working capital had produced positive operating cash flow of $7.4 million, compared with $2.7 million for the corresponding prior period.

The net bank debt to EBITDA ratio had also been reduced to 1.1 times at 31 December 2009 compared to 2.2 times at 31 December 2008.

Commenting on the decline it revenue, the company said sales of memory modules were down on the corresponding prior period, as were sales in its electrical, data and communications business, which had been affected by "subdued levels" of housing and commercial building.

Despite this, the company’s increased its sales and support headcount during the half to position the group to take full advantage of expected improvement in the economic climate.

“The group has not forecast earnings for the remainder of this financial year as this would require a view of the future dependent on a number of uncertain variables such as the strength of the Australian economy, demand for our products, Australian currency variations, cost movements of suppliers and many other factors which remain volatile,” the ASX statement reads.

“Accordingly the directors will not be offering a forecast and caution against the extrapolation of the half-year result as a reflection of the company’s possible performance for the full year.”

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