Cambridge-based provider of engineering data and design software, Aveva, has announced that it will be reducing its workforce by 10 per cent amid difficult market conditions.
In a trading update, the company said that it expects full-year results to be in line with forecasts, but stated that funding difficulties had caused delays to major projects, placing greater scrutiny on future capital expenditure.
Software design orders for new-build ships have declined dramatically and the levels of funding available within the existing ship design order backlog have caused the group to forecast a significant decrease in new licence sales. This has also been reflected in its power-plant software division, where capital expenditure commitments have been put on hold.
However, despite increasing turbulence in its end markets, the company noted a strong balance sheet and expects a 45 per cent increase in net cash at the end of the year. It also expects revenue decline to be partly mitigated by a strong performance from Aveva Net, where it has a number of potential contracts in the pipeline.
Looking ahead, the company said that it anticipates revenue from initial licence fees to decline by 30-40 per cent, alongside a small decline in rental and annual fees. This has resulted in the company cutting staff and combining its two European-based reporting structures under one Europe, Middle East and Africa (EMEA) division in order to reduce costs by approximately £5m per year.Commenting on the announcement, Richard Longdon, chief executive at Aveva, said: ‘Aveva is a highly profitable and cash-generative business and is continuing to execute well. 2008/2009 has been a record year for the company despite increasingly difficult trading conditions. The reshaping of the business is designed to ensure that we have an appropriate structure for more difficult market conditions while continuing to invest for the future.’