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LONDON (Alliance News) - Mobile Streams PLC Friday saw its profits for the year to end-June hit by the devaluation of the Argentine peso, and whilst it expressed positivity in its future prospects, it warned that investments will hamper its profitability in the short term.
The mobile content company posted a pretax profit of GBP153,000, down from GBP4.8 million, as revenue dropped to GBP48.6 million from GBP53.9 million a year before.
Results were hit by the sudden devaluation of the Argentinian peso in January, which is where Mobile Streams derives a majority of its revenue. On a constant currency basis, revenue in Argentina rose by 16%, Mobile Streams said. This devaluation led to an overall reduction of around GBP1 million to its results, including a GBP240,000 cost relating to moving money out of Argentina earlier in the year.
Mobile Steams noted that any further devaluation of the currency will hurt its future performance.
Mobile Internet Revenues and Mobile Operator revenues fell as customers updated their phones from legacy models to smart-phones, leading to lower usage of operator content portals, as the customers move towards using independent portals and the open mobile internet more actively. Compounding this was a reduction in gross profit margin to 29% from 33% due to increased marketing costs.
Mobile Streams is continuing to diversify its revenues to new markets beyond Argentina, particularly looking at other Latin American markets, and other emerging markets including Africa, Asia and India. It has executive five agreements covering various African markets to date, it said. However, this diversification will require investment during the rest of the current year, which will reduce profitability in the short term.
"We are positive about the company's future prospects as we are seeing opportunities for long-term growth particularly in emerging markets across Latin America and further afield in Africa, India and Asia," said Chief Executive Simon Buckingham in a statement.
Shares in Mobile Streams are trading down 6.7% at 14.00 pence Friday morning, shortly after market open.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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