LONDON -- Pace
A 15% drop in revenue and a 27% fall in net income for the first half of the year may not qualify as good news in many investors' books, but management's positive outlook -- calling for 16% sales growth for the second half of the year and raising guidance on operating margins -- boosted the company's shares more than 11% this morning.
In addition to anticipating the successful launch of next-generation products in the U.S., Pace's largest market, the company's new management team has focused on cost control -- operating expenses were down 13.5% compared with the first half of last year -- and better inventory management. The result was a 62% increase in operating cash flow, which helped fund a 15% increase in the interim dividend and a reduction in net debt from $321.7 million at year-end to $243.3 million on June 30.
Rising cash flow and an improving balance sheet are the types of things investors like to see -- as evidenced by today's price jump. However, today's move pales in comparison with the 192% return Pace's shares have provided since last November, when the company was surrounded by uncertainty and fear.
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