AVEVA upbeat after strong second half

Engineering data and IT group AVEVA Group said that it expects to hit revenue and profit forecasts for the full year after its second half saw good demand.

The firm said that it saw "continuing good demand" for its Engineering and Design Systems (EDS), helped mainly by the strength in Oil & Gas. Power has seen steady growth but the Marine markets remain depressed, as anticipated, AVEVA said.

During the period, the company launched its new plant-design software product, Everything3D (E3D) which is aimed at enabling engineering, procurement and construction contractors to break down barriers between design and construction, reducing overall project cost, schedule and risk.

The firm said that it has been well-received though did not give a financial contribution to results in the year to March 31st.

AVEVA also announced that its Enterprise Solutions division moved into profitability for the first time after strong revenue growth in the second half.

Chief Executive Richard Longdon said: "The strength of the group derives from its technology leadership and global platform. We are pleased with the outcome for the year, the strong performance in the second half of the financial year, and the successful launch of our major new product, E3D.

"In particular, the move into profitability in Enterprise Solutions is a major milestone for the group and a highlight of these results."

The firm said that there hasn't been any noticeable shift in the regional trends since the third quarter: Europe, the Middle East and Africa (EMEA) continued to perform strongly; the Americas saw continued weakness in Latin America due to EDS project delays in Brazil and the timing of rental renewals (as previously disclosed); Asia Pacific is said to have performed well with strong progress in China.

Analysts' viewsSanlam Securities released a research report on Tuesday morning saying that the in-line trading update prompted it to move its rating from 'sell' to 'hold'.

"The update is positive in that AVEVA has been able to withstand a slowdown in the Latin America region through resourcing constraints. This was previously an important engine of growth for the business, and we suspect the Chinese subsidiary must have performed very well in Q4 to compensate," said equity analyst Roger Phillips.

Meanwhile, Northland Capital Partners analyst David Johnson said that E3D was a "significant product launch" for the group and provides "considerable upgrade potential for the installed base".

The stock was up 2.18% at 2,108p in early trading on Tuesday.