Payment technology provider Provenco says it is still on track for full-year, double-digit revenue growth despite expecting an interim loss.
Chairman David Wolfenden said yesterday the company expected to make a net loss of $2 million for the six months to December 31, compared with the $2.7 million
net profit in the previous year's first half.
"The unexpected strengthening of the New Zealand dollar has had a material impact on the result," Wolfenden said.
Continued investment before international contract opportunities had also impacted on short-term profitability.
"We are currently under consideration for major contracts in Asia, with other opportunities also being vigorously pursued."
The guidance was in line with sentiments expressed at October's annual meeting for lower first-half returns and a stronger second half.
However, shares slumped 8c yesterday to close at $1.09, suggesting investors had not expected a first-half loss.
ABN Amro Craigs analyst Brett Orsler said even though the guidance was consistent with the annual meeting it was still a surprise.
"I think the market expectation was still that the company would post maybe just a flat interim result compared with the previous corresponding period," he said.
The exchange rate against the US dollar was expected to decline and Provenco's second half performance could improve but the company might now only break even, Orsler said.
"If the currency does weaken, they announce one or two contracts, and if they do get a bit of a tailwind from these replacement Eftpos terminals you may look at a $2 million net profit for the second half."
The company could benefit from a slow build-up of business towards the next replacement date for Eftpos terminals of January 1 next year.
This was when about 60,000 terminals in New Zealand would have to be replaced to meet new security standards, Orsler said.
The first wave of terminal replacements by January 1 last year had boosted performance in the previous corresponding half, he said.
Chief executive David Ritchie said full-year profit guidance would be given when the detailed half-year results were released on February 21.
