LONDON -- Shares of Photo-Me International, a global operator of photobooths and other vending equipment, are on the rise after the company said it expects further progress in the year ahead. The London-based company reported a 12% increase in full-year profit.
Pretax profit increased to £20.1 million ($31.3 million) for the year ended April 30 compared with £18 million ($28 million) the prior year. Revenue decreased to £207.8 million ($323 million) compared with £219.8 million ($341.6 million) in 2011 as a result of ongoing weakness in its sales and servicing.
"Despite revenue being 5.4% lower over the year, we have continued to improve our profitability thanks to a robust performance from our operations division in our key geographic markets," said Photo-Me nonexecutive chairman John Lewis. In addition to profit improvement, Lewis said Photo-Me increased its net cash resources by £11 million to nearly £52 million. He said disappointing results in sales and servicing suggests further restructuring is necessary.
Lewis said the automatic photo machine company would be recommending a final dividend of 1.25 pence for an annual total dividend of 2.5 p., representing an increase of 25% over the year.
"Subject to the risks and uncertainties detailed in the business and financial review, the board once again anticipates further progress over the coming year," Lewis said.
Photo-Me has two principal activities monitored by its board. The operations division comprises the operation of unattended vending equipment -- primarily photobooths, digital photo kiosks, photobook makers, amusement machines (mostly kiddie rides) and business service equipment. Sales and servicing includes the development, manufacture, sale and post-sale servicing of its vending equipment, along with its photo processing equipment and photo album-maker solutions.
Operations represented 86% of Photo-Me's revenue, compared with 80% in 2011. Divisional revenue increased 0.7%, but operating profit rose 18.7%, led by a strong French performance and improvements in Germany (where management has been strengthened), Switzerland and Japan.
At yearend, the total number of vending machines sited worldwide was 43,300, compared with 43,700 in 2011. The decline was brought on by a reduction in amusement machines; the number of photobooths increased by 1,000-plus units, and Photo-Me now has 23,500 of them on location. Photobooth vending is the company's strongest asset, and it credits longstanding site-owner contracts and relationships supplemented by an established field service and cash-collection infrastructure for this success.
While Photo-Me operates in 15 countries, about 86% of its sites reside in three territories -- the UK and Ireland, France and Japan. By area, Continental Europe accounted for 19,400 sites, compared with 18,300 in 2011; the UK and Ireland for 14,950, compared with 16,850 the year prior; and Asia for 8,950, compared with 8,550 last year.
In France, Photo-Me is upbeat about the market for its digital-printing kiosks. It has introduced an all-in-one kiosk, which also incorporates a Pocketbook Maker, that produces prints or a printed 10x15cm. photo album. The ability to produce large-format prints has been well received in France, the company said.
In China, growth of Photo-Me's business has been slower than it had originally anticipated. The company has acquired operating licenses in Shanghai, Beijing and Guangzhou, but cautioned that China remains a long-term development prospect.
Photo-Me said the rollout of its designer photobooth by Starck is "progressing to plan and results to date have been encouraging." There are now 370 Starck booths in operation and Photo-Me hopes to increase the number of machines by 2,000 over the next two years. Photo-Me partnered with Philippe Starck, the acclaimed French product designer, to create a photobooth that supports social media applications.
Photo-Me was listed as a public company in 1962. Click here to see the company's full annual report.