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Highlights

  • SDL saw a decrease in total revenue and profit margins in FY24.
  • International operations face external challenges, particularly economic slowdowns.
  • The company initiates a broad-based restructure to address cost pressures.

Solution Dynamics Limited (NZX:SDL), a player in the customer communications market, has experienced a dip in its financial performance in the financial year 2024 (FY24). The company focuses on essential mail, interactive marketing communications, and on-demand communications.

FY 2024 Financial Performance

SDL's total revenue for FY24 was NZD 38.67 million, representing a 4.65% decrease from the previous year's NZD 40.55 million. Gross profit also saw a decline of 8.1%, from NZD 16.15 million to NZD 14.84 million. This decline was primarily attributed to pressures on the cost of goods sold, including non-recoverable production costs for a major client.

Moreover, during the reported period, the international operations generated modest new business, and the company placed significant focus on retention of existing client.

Despite the revenue drop, SDL’s net margin showed a positive result, standing at 7.3% for FY2024, significantly higher than the industry median of -11.5%. The company's return on equity (ROE) stood at 34.5%, well above the industry median of 5.1%.

Cash flow from operations for FY24 was NZD 3.35 million, down from NZD 4.84 million in FY23. The net cash and short-term deposits at the end of the year totalled NZD 7.95 million, compared to NZD 6.63 million in FY23         .

The directors of SDL declared a final dividend of 2.5 cents per share, up from 1.5 cents in FY23, taking the total cash dividends for FY24 to 9.5 cents per share, a drop from 11.5 cents in FY23.

Strategic Outlook

SDL has commenced a broad-based restructure across both its New Zealand and international operations. The restructuring aims to optimise resources and reduce operational costs, with the goal of improving the company’s financial standing in the face of a tough economic climate.

Share performance of SDL

SDL shares closed at NZD 0.68 per share on 28 January 2025. In the past three months, SDL share price has dropped almost 44.26%, and in a week, it has increased by nearly 1.49%.

52-week high of SDL is NZD 1.60, recorded on 4 March 2024 and 52-week low is AUD 0.65, recorded on 23 December 2024.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 28, 2025. The reference data in this report has been partly sourced from EODHD/Others.