Shares in Concurrent Technologies (AIM:CNC) PLC advanced 6.5% to 76.70p after the company said it expects revenues for 2022 to come in 10% ahead of forecasts, with profits being “at least in line”, as it ended the year with its "highest ever" order backlog.
Consensus market expectations are for revenues of £16mln and pre-tax profit of £0.1mln for the year to 31 December 2022.
In a trading update, the maker of high-end embedded computer systems and boards for critical applications said the results were achieved despite global supply chain shortages, which delayed manufacture, shipping and revenues.
To mitigate the supply chain challenges, Concurrent said it invested “significant” cash into holding increased inventory to react quickly when parts became available, as happened at the end of 2022. The company implemented a double shift throughout the fourth quarter, resulting in record revenues in November and December.
Order intake for 2022 rose by 25% to over £31mln, with a year-end backlog in excess of £26mln, indicating a potential for "significant revenue growth” as supply chain problems ease, Concurrent said.
It plans to run double shifts throughout quarter one of 2023, maintaining its increased capacity.
"Whilst the prolonged components shortages have frustratingly slowed down revenue generation, it is clear that our strategy is yielding growth potential,” commented chief executive officer Miles Adcock in the post-close trading update.
“The fact that we have our highest ever backlog, following a record order intake, gives us real optimism for short to mid-term performance growth as supply chains improve. In addition, our longer-term strategies are exciting our customers and colleagues, so it is all to play for," he added.
Investment in R&D, systems and growth as well as the additional spending on components holdings to mitigate supply shortages resulted in a depletion of cash, which stood at around £4mln at the year-end.
However, the increased shipping of product in November and December last year is expected to result in strong cash generation at the start of 2023.
Concurrent noted that while supply chains are recovering, it is dependent on some very specific components, and it is therefore keeping its 2023 forecasts “prudently cautious”.
The company said it will continue to invest in growth in the current year, including plans to make acquisitions that align with a strategy of owning more of the technology building blocks in embedded systems, in addition to single board computers.
It will not pay a dividend in respect of 2022, instead making further investment across the business, including in component holdings to mitigate the impact of any potential further restrictions.