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Infomedia Limited shares sink on profit warning

car

Shares in car parts software business Infomedia Limited (ASX: IFM) dropped around 5% to 53 cents today after the company revealed that it now expects full year profit to be in the range of $10.2 million to $10.5 million. The big hit to the bottom line is a result of restructuring costs and investments for growth that the company hopes to realise the benefits of in financial year 2017.

If the company delivers on its revised forecast then profit will be down around 30% on the prior corresponding year, which is a result reflected in a share price that has tumbled around 50% over the last 12 months.

The company also lost its chief executive and chief financial officer over the past year amidst a reported power struggle at the top of the company. Despite the internal problems and profit falls it still expects to deliver revenue growth in the region of 12% for the full financial year. This is a decent result amidst a competitive environment and investors in the company will hope the new management team is able to bring costs under control to lift earnings in the years ahead.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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