RWS adjusted profit falls, shares slide
By Josh White
Date: Thursday 24 Apr 2025
(Sharecast News) - RWS Holdings reported modest organic growth in the first half of its 2025 financial year on Thursday, with revenue rising 1.3% on a constant currency basis, although falls in reported revenue and adjusted profit saw its shares slide.
The AIM-traded firm said reported revenue was expected to be £344m, down 1.8% year-on-year, with growth across three of its four divisions.
It said the language and content technology division and AI-led services, including TrainAI and Language Weaver, performed particularly well, while client retention remained high and new clients were secured across a broad range of sectors.
However, adjusted profit before tax was expected to fall to around £17m, compared to £46m a year earlier, largely due to non-trading items including foreign exchange effects, increased amortisation, the sale of PatBase, and a shift in accounting for technology investment.
The company also cited margin pressure from a weaker mix in regulated industries and transition costs associated with new delivery models.
Cash generation remained strong, with net debt of £27m after paying a £37m final dividend.
RWS reaffirmed its guidance for modest single-digit organic growth for the full year, supported by a stronger second-half outlook and benefits from ongoing cost reduction and automation initiatives.
Full-year adjusted profit before tax was now, however, expected to range between £60m and £70m, with gross margin for the year expected to be around 300 basis points lower due to mix changes.
"The group's first half results reflect our strong focus on organic revenue performance, with OCC growth in three of the four divisions," said chief executive officer Ben Faes.
"We are particularly encouraged by the growth that we have seen in the Asia-Pacific region, with new logo wins and retentions with several globally-recognised brands, a strong performance from L&CT and a solid end to the first half seen in language services and IP services.
"Our AI-focused solutions continue to gain traction with clients and we expect the group's growth momentum to accelerate through the second half, giving confidence in the delivery of OCC growth expectations for the full year."
Faes said that while changes in the company's mix of work and to new delivery models for certain clients had impacted profitability during the transition phase, RWS was confident that the actions being taken to drive efficiency, agility and automation across the group would support sustained profitability as the firm captured the higher volume growth anticipated in its markets.
"We therefore continue to invest to deliver future growth and improved performance.
"Central to this is an improved go-to-market approach and a clearer articulation of the value that we bring to our clients' content, data and ideas, underpinned by a more flexible and efficient delivery platform."
At 1135 BST, shares in RWS Holdings were down 40.94% at 68.15p.
Reporting by Josh White for Sharecast.com.
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