Focusrite flags ongoing challenges in content creation market

(Sharecast News) - Music and audio technology company Focusrite said in a trading update on Friday that its content creation division encountered ongoing market challenges during the first four months of the financial year, particularly in Asia and among traditional 'bricks and mortar' resellers in the Europe, Middle East and Africa (EMEA) region. The AIM-traded firm, which was holding its annual general meeting, said that, although the challenges had some impact on sales, there was still solid ongoing demand for key Scarlett products.

It said that, as per industry data, it was still outperforming competitors despite subdued overall market conditions.

Additionally, the industry's channel stock position was gradually improving, albeit at a slower pace than anticipated.

In the audio reproduction division, Focusrite reported strong performance, and a robust pipeline for the full year ahead.

Gross margins were maintained, and the company said it was taking steps to optimise costs following investments made last year to support the enlarged group.

Despite recent increases in freight rates and ongoing geopolitical uncertainties, the company's profit expectations for the full year remained unchanged.

Those expectations were set to be heavily weighted towards the second half of the year, which would include multiple new product launches.

"We continue to pursue our proactive merger and acquisition strategy, focusing on opportunities that enhance earnings, broaden our market reach, augment our research and development capabilities, and add both scale and dynamism to our operations, as evidenced by the recent acquisition of OutBoard, which is integrating successfully into the group," said non-executive chairman Phil Dudderidge.

"Overall, we remain optimistic about our future prospects, and we continue to see tangible results stemming from our strategic diversification efforts which enhance our resilience in the face of global and industry-wide challenges."

At 1011 GMT, shares in Focusrite were down 3.51% at 506.55p.

Reporting by Josh White for Sharecast.com.