RXP posts ‘disappointing’ half year as losses spike

RXP posts ‘disappointing’ half year as losses spike

Unexpected financial hits send profit plummeting 221 per cent

Ross Fielding (RXP)

Ross Fielding (RXP)

Credit: RXP Services

Digital services consultancy RXP Services has posted a $5.4 million loss for the half year ending 31 December 2019.

The publicly-listed company saw its year-on-year net profit after tax sink by 221 per cent from its previous $4.2 million profit in what CEO Ross Fielding called a “disappointing outcome”. 

RXP had earlier warned shareholders it was expecting a lower forecast due an unexpected government project deferral in the southern region, which combined with lower sales conversions, hit its half year results.

As well as the deferral, RXP also faced an “unexpected 10-day mandatory leave” initiative that was implemented by a client which “adversely affected” utilisation rates.

The company’s revenue dipped to $65.1 million from $69.3 million in the last period, while a Goodwill impairment of $7.5 million also struck the balance sheet. 

In addition, RXP also reported lower than expected performance in its digital marketing services unit. However, the company said it has invested in the unit across areas of customer experience, human centred design, and general digital capabilities. 

“This positions RXP for long term growth despite the short-term lower returns and sales conversion challenges faced,” according to the company. 

Despite the grim results, Fielding remained hopeful for RXP’s long-term prospects, saying structural challenges in the south had been addressed and a new regional leader, Jared Hill, had taken over.

“The changes made have already shown positive signs, with improved utilisation rates being achieved early in the second half,” Fielding said. “The other 'one-off' impacts, while affecting the first half earnings, are not seen as indicators of longer-term weakness for the southern region.”

He added that RXP is expecting to close a number of significant deals valued at over $25 million, saying it was set up for a strong second half.

"RXP’s exposure to digital work continues to position us for the long term,” he said. “The transition to digital across the globe continues to grow, and the investment that RXP has made in its digital capabilities over the past two years means the Company remains well placed to be a key provider of digital transformation services in the Australian market.”

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