Axis Communications is prospering in the Americas, although growth has dipped as the benefits of currency fluctuations felt in the third quarter peter out, the company’s end-of-year report has revealed.
Delivered via webcast by CFO Fredrik Sjostrand and CEO Ray Mauritsson, the report announced a fall in operating profit to SEK166m, although net sales rose 10%.
Measured in local currencies, revenues grew by 17% across the network video manufacturer’s global portfolio. “The global macroeconomic situation continues to dampen growth in some countries while boosting strong growth in others,” said CFO Fredrik Sjostrand.
Growth volatility
Sjostrand says he expects growth volatility between quarters expected to continue. Recruitment this year, said the CFO, will focus on bolstering the sales and marketing and the R&D teams. “This year will see an intense marketing agenda with several sales shows coming up,” says Sjostrand. Last year saw Axis’s payroll grow by 224.
“We’ve used 2013 to adjust our expansion rate to be more or less in line with what we see as the market and sales development right now,” said Mauritsson. “The plan now is to continue at a similar pace when it comes to expansion and recruitment.
“We continue to see [the] same ramp up in terms of market growth and recruitment.”
CEO Ray Mauritsson outlined product developments in the pipeline, with a focus on developing more proactive video surveillance solutions. On balancing the competing priorities of maintaining profit margin and market share, he says, “It’s a difficult question. We’re quite aggressive when we have a chance for a big project and we’re involved. We don’t just let the competition take that just because of lower price — we can be price-aggressive too.”
Growth was still “overweighted” to the Americas, which generated revenues of SEK580m, compared to SEK556m in the third quarter. “The team over in the US is growing to be quite a big team,” said Mauritsson. “We’re dividing a big organisation into six pieces. But the ambition is also to build up local presence with local offices in six territories to be closer to customers when it comes to arranging training and meetings, et cetera.”
Despite a slightly sunnier outlook in Europe, Axis isn’t feeling the benefit just yet. “The indicators seem similar to 2013. Our indicators don’t indicate an improvement or change. But of course, if you listen to the news it’s a slightly more positive outlook – which could be positive for us of course.”
Quizzed about the proportion of sales accounted for by installations of fewer than 60 cameras, Mauritsson admitted that the company “still cannot exactly measure that. If I were to guess I would say not more than 10% — probably below.”
Sjostrand emphasised that there wasn’t necessarily a proportional correlation between gross margin and sales. Third quarter figures were inflated by a “big effect from currencies. Products [were] bought at a US exchange rate, and when we sold our products we improved our margin. We see that it created a perfect storm in [the third quarter] and we’re now back to normal.”
Founded in 1984, the Swedish manufacturer was the first company to launch a network camera — the Axis Neteye 200 — in 1996. Its biggest markets are vertical segments such as transport, infrastructure, retail, banking, education, government, and industrial.
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