LONDON (ShareCast) - (Sharecast News) - Language, content and intellectual property technology specialist RWS Holdings reported a shrinking of first-half revenue and profit on Wednesday, but said it expected its full-year performance to align with market expectations despite certain challenges.
The AIM-traded firm said that for the first half, it recorded revenue of £350.3m, a 4% decline year-on-year.

Adjusted profit before tax decreased 16% to £45.6m, while reported profit before tax fell 40% to £17.3m.

Its adjusted basic earnings per share dropped 14% to 9.1p, and basic earnings per share declined 44% to 3p.

Despite the declines, the company approved an interim dividend of 2.45p, a 2% increase from the previous period.

The group said it saw a return to growth in two of its four divisions, with significant traction in AI-based solutions like TrainAI, Language Weaver, and Evolve, which contributed to new business wins.

High levels of repeat revenue and incremental contributions from growth levers, particularly in AI-related products and services, supported that progress.

Organic constant currency revenues declined 2% - an improvement from previous periods, with the group returning to growth in the second quarter.

Language service and IP service divisions showed positive growth, driven by strong performances in Enterprise Services and the Eurofile segment, respectively.

However, the Language and Content Technology and Regulated Industries divisions faced challenges, with revenue contractions on an OCC basis.

RWS's production platform, Language eXperience Delivery (LXD), enhanced efficiency across the group, managing a majority of the localisation volume in Language Services and Regulated Industries.

Gross margins were maintained at 45.7% due to cost reduction actions and LXD efficiencies, despite weaker performance in higher margin businesses and foreign exchange headwinds.

Net debt stood at £38.9m, reflecting payments for dividends and a share repurchase programme.

The company said its cash conversion was 30%, impacted by weaker business performance and planned investments, but was expected to normalise by year-end.

Additionally, RWS completed the acquisition of ST Comms Language Specialists, expanding its reach into the African market.

Strategically, RWS said it was continuing to invest in sales and marketing, research and development, and transformation initiatives.

The company launched HAI, a digital self-service platform, and planned to release new AI-enhanced versions of Trados Studio and Tridion Docs in the third quarter.

It said the disposal of its interest in PatBase also strengthened its balance sheet.

RWS anticipated a stronger performance in the second half of the year, driven by new business wins and some recovery in higher-margin segments.

"The group's first half results reflect good progress in a number of areas and demonstrate that we are well positioned for clients' increased appetite to harness AI to meet their language and content needs," said chief executive officer Ian El-Mokadem.

"Our successes with TrainAI and Evolve, which have continued into the early part of the second half, demonstrate that our AI-enabled solutions are resonating with clients at this pivotal moment for our industry."

El-Mokadem said the company remained committed to the investments in growth and transformation that would underpin future revenue and margin development, alongside continued effective cost management.

"The group returned to growth in the second quarter, and has had an encouraging start to the second half, currently pointing to a performance in line with market expectations for the full year.

"The multiple long-term growth drivers for our products and services continue to give us confidence in the future."

At 1151 GMT, shares in RWS Holdings were up 16.73% at 195.4p.

Reporting by Josh White for Sharecast.com.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE