Provenco shares in 18pc tumble

A profit downgrade yesterday wiped out six weeks' worth of sharemarket gains for electronic payment solutions company Provenco.

Provenco shares tumbled 18 per cent after the company said profits for the full year to June 30 would be between $7 million and $7.3 million - down from the $9 million previously expected.

Chairman David Wolfenden said the downgrade did not represent any overall loss of revenue and was purely related to timing.

Two issues - one in the domestic market and one in the international - had pushed earnings, which were expected this financial year, out into the next.

That did not prevent a dramatic sell-off of Provenco stock - which slid from 90c to close at 74c.

The shares had risen from 75c on April 1 on the back of positive coverage by market analysts.

However, Wolfenden said nothing had changed to affect the long to medium-term outlook for the company.

The downgrade had been driven in part by a sharper-than-expected April decline in demand for compliance work related to EMV (Europay, Mastercard, Visa) upgrades.

Eftpos network operator Electronic Transaction Services (ETSL) and banks Westpac, BNZ, ASB and National Bank have set a deadline of January 1 for their retail customers to swap old terminals for new chip card readers.

Wolfenden said the April slump did not represent any loss of market share for Provenco but seemed to reflect a reluctance of retailers to invest in new technology due to uncertainty about the economy and consumer spending.

"Retailers are still going to have to buy these machines," he said.

The provision of eftpos terminals for the local market represents about 20 per cent of Provenco's revenue.

On the international front, Provenco Retail Automation - which is a supplier to the retail oil industry - had also experienced some timing movements with offshore contracts.

That had also pushed some earnings forward into the next financial year.

Wolfenden said it was important to note that lumpy earnings were a key part of Provenco's business.

The directors remained positive about long and medium-term growth prospects.

"We are actively exploring an increasing number of opportunities in many markets and we have two significant contracts under negotiation."

Last month, Provenco signed a deal with Mumbai-based Bharat Petroleum to provide payment terminals for 77 petrol stations throughout India's northern and western regions.