Oakton 1H profit falls

Softening market conditions impacted Oakton's (ASX:OKN) revenue and profit for 1H12, but the IT and consulting services company appears back on track in the second half.

Consulting and IT services provider Oakton Limited (ASX:OKN) has reported a 5.5 per cent decrease in 1H12 profit to $6.9 million, as a result of declines in revenue and margins.

Revenue for the half-year fell 7.2 per cent year-on-year to $85.4 million, with gross margins declining to 22.06 per cent of total revenue from 23.67 per cent.

OKN shares fell 12.69 per cent in Tuesday's trading to $1.170 after the results were announced.

Oakton managing director and CEO Neil Wilson blamed the profit slowdown on “softening...market conditions” as well as “the [domestic] impacts of international economic pressures.”

But he added that conditions have since been improving. “We are able to advise that the level of booked and committed revenue is now at a level that is in line with last year,” Wilson said.

While market conditions remain soft in NSW, ACT and Queensland, the company's performance in Victoria is now “acceptable... in the context of current market conditions,” he said.

Oakton's ability to offshore work to its office in Hyderabad, India, is also helping the company in the current economic climate, according to Wilson.

“During the half over $40 million of work was retained or won where the ability to offshore components of these projects was critical to our success,” he said.

In October, Oakton forecast that its revenue for FY12 would be ahead of the $177.5 million in adjusted revenue earned during the prior year.

As of the end of the 1H, Oakton was at 75 per cent of this revenue target, the half-year results show. The company also expects to earn around 55 per cent of FY12's revenue during the second half.

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