Singulus second-quarter profit drops 29 percent

Singulus, the world's biggest maker of CD and DVD machinery, made a smaller operating profit in the second quarter as it continued to rely on low-margin CD equipment for much of its revenue, it said on Monday.
The group still hopes to raise full-year profits, however, pinning hopes for strong deliveries later this year of its more lucrative machines to make DVDs, for which it received high orders in the first half of the year.
"Only a portion of the high order intake for this business segment had been delivered (in the first half-year), the balance of which will be accounted for in the third and fourth quarter of this year," it said.
Singulus shares, which had lost 10 percent of their value on Friday on rumours quarterly profits would disappoint, rebounded, trading nearly six percent higher at 14.50 euros. Analysts said the group would now have to deliver in the next quarter.
"The order intake is very strong, but the profit is weak and still a bit below expectations," said Sven Weier, analyst at UBS. "The Q3 must bring the breakthrough - but we'll only know that in November (when Singulus reports third-quarter results)."
Earnings before interest and tax (EBIT) fell 29 percent in the three months to June, to 9.0 million euros ($11 million) as the more lucrative DVD 9 product lines made up a smaller share of sales than a year ago, Singulus said.
Second-quarter order intake was 50.9 percent higher at 146.4 million euros, and orders for DVD products were much higher than last year, Singulus said. Sales rose 11 percent to 91 million euros, while net profit fell 26 percent to 6.1 million euros.
Singulus has almost two-thirds of the global market in production equipment for pre-recorded DVDs and around half the market in pre-recorded CD equipment. In higher-margin equipment for record-able discs, it has around 20 percent in DVDs and 10 percent in CDs.
Singulus has said it expects growth this year to be driven by demand for record-able CDs, particularly in Asia, which accounted for 9 percent of its sales last year.