FY17 results reflected the declining impact of regulatory changes on demand in Germany. International sales continued to grow in FY17 and the company saw good demand for its Duratec product line. Vectron Systems' (DE:V3SG) push into marketing services is progressing well: bonVito is close to profitability and the new GetHappy app is currently being trialled in Leipzig. We view the full launch and then uptake of the app as the key drivers of the share price.
Boost from regulatory changes recedes
Vectron continued to see strong demand for its products in H117 after a very strong H216, supported by changes in regulations for cash registers in Germany. This effect waned in H217, resulting in a small revenue decline for FY17. Combined with a small increase in costs, the company reported FY17 EBITDA €1.4m lower than a year ago. Despite more than 30% of customers not having upgraded to compliant systems, management does not expect a strong uptick in demand for its POS systems in FY18, instead suggesting that this is more likely to happen in FY19 ahead of further regulations coming into force in FY20.
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