Varied expectations ahead for Tagmaster in volatile market

Kista, Sweden

According to the recently released third quarter results for Tagmaster, the company believes it has successfully come through in line with expectations, following a first nine months that included a strategy of cost cutting and integration of a clutch of new acquisitions.

In terms of sales revenue, in the 3rd quarter itself net sales decreased by 2,6% to 43,8 MSEK, but during the three quarter year period of January to September 2018 overall net sales turnover increased by 10.2% to 151.5 MSEK compared to 137.5 MSEK in the previous year, although margins before depreciation (EBITDA) corresponded to 7.8% this year compared to 10.2% in 2017.

CEO, Jonas Svensson believes that the  sales during the quarter have been influenced by the vocational months and confirmed that they have taken some product/services areas with lower margins away to simplify the business. In addition personnel reductions made earlier are now starting to show results in a lower cost level, although the cash flow has been influenced negatively by payments of around 4 MSEK for earlier announced personnel reductions.

Tagmaster's British businesses, CA Traffic and Citysync, have started to harvest from the ongoing integration, but according to Svensson, they still have a way to go to reach the company's profit goals. "Cost reductions are in principle ready and we continue the work to strengthen our sales and marketing resources." says Jonas Svensson.

"Our French businesses have during the period shown satisfactory momentum, where Balogh continues to show good development. Personnel reductions in Balogh are in principle ready and we will soon have a cost level able to deliver a good profit also at lower volumes. Magsys has taken several projects with CA Traffic solutions in the French market and they have also started the introduction of CA Traffics management system for traffic solutions. The French government has the ambition to increase investments in favour of bicycle traffic in the cities and Magsys and CA Traffic will together offer solutions and be part of this exciting market. Citysync’s products have been adapted to the French market and are now ready to be marketed in full scale." explains Svensson.

The Hikob acquisition has strengthened Tagmaster's presence even further in the French market for smart cities and these IoT products are an important strategic complement both for parking solutions and for the company's traffic solutions. Looking to the future Svensson says, "we see in front of us Hikob’s products being sold by CA Traffic in the UK, by Tagmaster in the Nordics and that some of our international sales channels could start selling Hikob’s products during 2019."

"In France we have started recruitment to strengthen our sales and marketing resources." He added.

"Tagmaster has had a quarter in line with expectations, considering that our rail sales are lower during 2018, with continued heavy development work with our new products for toll roads which should be ready during Q4. Tagmaster continues the launch of CA Traffic products as well as now also Hikob products in the Nordic market and medium term we expect good growth also in this market."

In conclusion he states. "We have come a long way integrating our acquisitions, but it is still worth mentioning that the variation could be significant between quarters and even years since among others our rail business is volatile to its nature."


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