SQS Software Quality Systems AG Share News (SQS)

(ShareCast News) - SQS Software Quality Systems tumbled after the company said it profits for the full year are likely to be slightly below its previous expectations due to margin pressures in its testing division, as it posted a rise in first-half profit and revenue.The company, which supplies software quality services, said pre-tax profit rose 5.6% to €9m, on revenue of €150.3m, up 16.1% from the first half of last year.However, it downgraded its expectations for the full year on the back of margin pressures in its regular testing business. Still, SQS said it was addressing its exposure to margin pressure in the business by reducing client numbers, overhead costs and headcount.Gross margins in the managed services division improved to 35.9% from 35.7% in the first half of 2014, but margins in the regular testing business fell to 26.4% from 33.6%.Chief executive officer Diederik Vos said: "The performance during the first half has further strengthened the fundamentals of our business and our growth strategy, despite lower gross margin performance in Regular Testing Services. With Managed Services now accounting for nearly 50% of revenues and a record order intake, the company is well placed to continue building on the momentum achieved to date."At 0910 BST, shares in SQS were down 15.7% at 480p.