December 15, 2017 / 9:00 AM / a year ago

UK software firm SDL's shares tumble 25 percent on profit warning

(Reuters) - Shares of SDL Plc (SDL.L) plunged 25 percent after the language translation software maker said full-year like-for-like core profit was expected to fall short of the current market estimate as some deals may not close by the year-end.

SDL said full-year sales pipeline was in line with expectations, but cautioned that some software deals may not be processed or fully awarded by the end of December.

The company, which has been refocusing on its core business in a turnaround effort, said while costs rose this year, revenue was deferred into future years.

However, SDL expects double-digit revenue growth in percentage terms and profit margins in the mid- to high-teens over the medium- to long-term.

Brokerage Investec, which rates the stock “buy”, cut underlying core earnings forecasts for 2017 and 2018 by 18-22 percent, following the profit warning.

“The turnaround needs more investment than we expected, but should ultimately drive longer-term value,” Investec analysts said.

The company also plans to increase overall investment, with a focus on developing its premium solutions in faster-growing businesses.

Shares of the company fell as much as 25 percent to 345 pence, their lowest in over 2 years, in early trading on the London Stock Exchange.

Reporting By Justin George Varghese in Bengaluru; Editing by Amrutha Gayathri

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