Telephone directory services company Conduit expects to move into profit this year and is confident it will increase its UK business significantly if that market is deregulated.
Reporting a 93 per cent rise in revenue to €10.8 million and a jump in net losses to €3.9 million from €1.06 million for the first quarter to the end of June, chief executive Mr Liam Young forecast the company would produce operating profits before interest, tax, depreciation and amortisation by the final quarter this year.
In the first quarter, the loss before interest, tax, depreciation and amortisation jumped to €3.6 million from €600,000 in the corresponding quarter of 2000 as Conduit built up operations in Britain, Switzerland and Austria. Mr Young said the company would be EBITDA positive in the Irish market in the current quarter.
Conduit expects to benefit strongly from an expected deregulation of the British directory services market. Mr Young said he anticipated a formal announcement from the British regulator authority in September that competition would be allowed with the introduction of 118xx codes. Conduit was confident it was in "an excellent position" to win significant market share in Britain on deregulation, he said.
With a minimum of 700 million annual enquiry calls in Britain, Conduit would benefit significantly even if it took only a small share of that market, he said.
"Moving into profits in the Irish market is very important. It proves that we can do it, that our business model works. And it will be much easier to achieve profitability more quickly in the UK because of the economies of scale in a bigger market," he explained.
Conduit is on target to achieve its business plan this year, which involves doubling revenues and becoming EBITDA positive, according to Mr Young who said it had a good pipeline of business under discussion. Operating margins in the first quarter, at 19 per cent, were slightly ahead of analysts expectations, he said. Margins would be considerably stronger in the current quarter, he forecast.
In the first quarter the company, which operates call centres in Dublin, Cardiff, Biel in Switzerland and Vienna, reported a 94 per cent increase in call volumes over the first quarter last year to 17.3 million calls. In the Irish market Conduit operates the branded 11850 directory assistance number as well as directory assistance for Esat Telecom and Esat Digifone.
Conduit has about 35 per cent of the Irish market and is now leveraging off this market share by adding other services and generating advertising revenue. The Swiss operation which was launched on June 25th is exceeding expected call volumes and is "potentially very profitable because of the higher prices of calls", Mr Young said.
With 1,270 full-time and 296 part-time staff, employment at the labour intensive business would continue to increase but would start to level out in the Irish market, he said. Conduit was interested in recruiting some of the employees who would lose their jobs when Gateway closes, he commented.
On the Neuer market in Frankfurt, Conduit shares initially slipped from an overnight close of €5.80.
Merrion analyst Ms Niamh Brodie said that while the results were better than expected, the market may have been looking for more detail on the British deregulation.
