Proact marches on despite slowing UK product sales

Pan-European storage integrator inches closer to five per cent profit goal as it posts another solid quarter

Pan-European storage integrator Proact has posted its fourth straight quarter of annual pre-tax profit growth, despite witnessing declines at its UK business.

For the three months to 30 September, Proact's UK business saw pre-tax profit fall by almost two-thirds to SEK1m (£86,000) on revenues that dropped 10 per cent to SEK115m (£9.92m).

Proact blamed this on weaker product sales in the country, which it attributed to a "hesitant market combined with the effects of changes made previously to the sales organisations".

Despite this, Proact's group numbers all travelled in the right direction, with pre-tax profit rising 30 per cent year on year to SEK17.1m (£1.47m). Revenues for the Nasdaq Stockholm-listed firm, which employs more than 660 staff across 14 European countries, rose two per cent to SEK455m (£39.24m), although revenues were down three per cent adjusting for currency effects.

Proact managing director Martin Ödman, highlighted the fact that Proact had reported annual pre-tax profit hikes for four consecutive quarters.

"My objective is for this positive development to continue, but I will not be happy until we achieve our profit target of five per cent with regard to profit before tax," he said.

Ödman said he harbours "high hopes" for Proact's start-up operation in Germany, which it launched on 1 October.

"Our aim is to grow on existing markets and grow geographically," he said.

Across the business, system revenues hit SEK261m (£22.51m) in the third quarter, down one per cent but representing a six per cent drop when adjusted for currency effects. Services revenues came in at SEK179m (£15.44m), up seven per cent but representing a two per cent increase in constant currencies.

Proact concluded SEK32m (£2.76m) of new contracts relating to cloud services during the quarter, with total cloud revenues rising 42 per cent.

"Every day I see evidence that our role as an independent integrator, focusing on specialist skills in the fields of data storage with associated consultancy and support services, integrated systems and cloud services are in demand on the market," said Ödman.

For the first nine months of its financial year, pre-tax profit clambered 55 per cent to SEK55.2m (£4.76m), when adjusted for non-recurring items. Revenue rose by three per cent to SEK1.62bn (£140m) on the same basis - flat in constant currencies.

The UK business saw pre-tax profits drop by nearly three-quarters for the first nine months of 2014 to SEK2.2m (£190,000), with revenues drawn from the country falling three per cent to SEK381m (£32.86m).