Pace has said its inventory management has now been normalized following the component issues that led to the set-top developer’s profit warning in May, but problems remain in its Europe business.
Announcing increased revenues of 21% for the first half of 2011, the company said that the impact of the Japanese Tsunami on potential availability of components has been largely mitigated, though less than ten are now effective. Although revenues may be lost for the second half of 2011, they will be on the books for 2012.
The Networks business has now been resized, however issues remain with the profitability and operational efficiency of Pace Europe, where margins remain low. Pace Europe President Mathias Hautefort left in May to be replaced by Mark Loughran, the former Nokia UK boss, brought in to head the network division.
Gaydon said that while one of the two customer account teams in Europe was delivering at margins above the company average, the second was clearly not. “It seems out of kilter with the rest of the group, so it’s not a perennial Europe problem or a pricing problem, it’s getting more efficiency and gross margin improvement. We’re really clear what the issue is in Europe and what we’ve got to do to resolve it”.
The difficulty is that product development time means that it could take up to 18 months to put a new product in the market, impacting the company well into 2012.
Pace Europe has now pulled out of the retail market and chose not to pursue a market launch in Italy.
Revenues stood at $1,187.1 million (€820.05m) from $978.2m in the first six months of 2010. EBITDA fell from $73.3m to $68.4m.
