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Shares in RWS Holdings PLC fell Wednesday as its annual performance is set to be at the lower end of expectations.
Revenue from Language Services is expected to be hit by reduced requirements for translation into Russian.
Shares in the Buckinghamshire, England-based technology-enabled language services provider were 27% lower at 341.16 pence on Wednesday in London.
Also on Wednesday, RWS announced its acquisition of The Hague, Netherlands-based Liones Holdings BV for €22.5 million on a cash- and debt-free basis.
Liones's flagship product is Fonto, an online editor for XML mission critical documents.
Alongside a €17.5 million initial payment, there will be additional payments of €2.5 million on both the first and second anniversaries of completion. RWS will fund the acquisition using its existing cash resources.
‘The acquisition of Liones enhances RWS's leadership position in the structured content market. We already admire the merits of its Fonto product as it forms an important element within our existing Tridion Docs product, and believe that Fonto will enhance RWS's capability to enable our customers to make the optimal use of their content,’ said Chief Executive Officer Ian El-Mokadem.
RWS Holdings said it had started its financial year ending September 30 on a strong note, with solid performances from Regulated Industries division and accelerated growth in Language & Content Technology.
However, the group expected continued weakness in IP Services due to a recent update from the European Patent Office, explaining that this ‘allows clients to delay the granting of patent applications to benefit from protection under the Unitary Patent’. This is expected to come into effect in the second half of calendar 2022.
Concerning Russia's invasion of Ukraine, RWS will no longer provide services or technology to Russian-owned businesses, and also expects reduced demand for translation into Russian from non-Russian owned companies.
As a result, revenue growth from the Language Services unit is set to moderate, and RWS's overall performance for the year is anticipated to be at the lower end of market expectations.
Company-compiled consensus expects RWS to achieve revenue between £744.8 million and £770.7 million, as well as adjusted pretax profit ranging from £131.5 million to £144.8 million.
In the 2021 financial year, RWS's adjusted pretax profit was £116.4 million, and revenue £694.5 million.
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