CMG shrugs off fear of downturn
Tuesday 09 March 1999
Cor Stutterheim, CMG chairman, admitted that worries about the year 2000 computer bug might cause companies to put projects on hold in the second half. However, he stressed that CMG's long-term ties with customers meant it would continue to outperform the market.
Chris Banks, finance director, said: "Public perception may be of a slowdown in some areas, but we don't see any reason for a slowdown. Demand remains strong."
CMG reported pre-tax profits of pounds 57.5m for the year to December, comfortably ahead of analysts' expectations. Excluding goodwill amortisation and exchange rates, profits grew 58 per cent.
The growth was helped by a sharp rise in margins in CMG's business in the Benelux, its most important geographical area. However, Mr Banks warned that margins - which hit 18.4 per cent last year - were likely to fall to 14 to 16 per cent in the next few years. The company expects to increase margins at its fledgling divisions in France and Germany.
Mr Stutterheim said CMG would continue to expand through acquisitions in continental Europe, but was not interested in buying in the US.
Analysts yesterday upgraded profit forecasts for the company to around pounds 75m, which puts the shares - up 59p at 1812p yesterday - on a forward earnings multiple of about 45. Although CMG is considered one of the highest- quality IT stocks, most analysts believe that at this level the shares are no more than a hold.
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