Aveva sees sales surge as switch to remote working boosts software giant

Craig Hayman could’ve been forgiven for having a stiff drink before his early night last night.

The boss of industrial software giant Aveva, who is in lockdown in the US, had seen his customer, BP, reveal plans to slash 10,000 jobs and cut spending. But it’s testament to Hayman’s strategy that the company struck a bullish tone today, reporting a surge in revenues and profits and hanging on to the dividend while many of its FTSE 100 peers cut theirs.

Aveva has been intent on diversifying away from its core oil and gas customer base — which still accounts for 40% of revenues — and smoothing out its once-lumpy revenues.

A push into supplying software for packaged goods manufacturers, power providers, chemicals companies, miners and water companies has broadened its income. The fact many of these traditionally dirty industries have been slow in digitising their operations has also helped since Covid, as corporates scramble to set up remote working and pay for training.

A shift to a subscription model in the wake of the £3 billion 2017 merger with the software arm of French energy group Schneider Electric has helped to boost recurring revenues and reduce the impact of oil and gas companies cutting spending.

Aveva, which has not furloughed any staff or taken government loans, kept its dividend flat at 29p and posted a 97% rise in profits to £92 million on revenues up 8.8% to £833.8 million.

It also plans to cut up to £60 million in annual costs by spending like slashing travel expenses but does not plan to cut jobs. Analysts at Investec called the results “resilient” and the shares hit the FTSE 100’s peak, up 142p at 4161p.

UK investors appeared out of step with the rest of the world — with the FTSE 100 off 94.85 points at 6377.74, in contrast to US markets, which have wiped out Covid losses, and Asian stocks enjoying an extended strong run. That’s despite a slew of grim economic news, including confirmation that the US is in recession and the World Bank forecasting the deepest recession since the Second World War.

Pharma stocks were making gains – with GlaxoSmithKline up 29p at 1669p, AstraZeneca rising 134p to 8334p and Hikma up 44p ro 2326p with a frisson still surrounding Astra’s rumoured tilt for Gilead Sciences.

On the FTSE 250, G4S was off 3% at 109.3p despite reassuring the market of its financial position. The outsourcer said it had received 75% of the money from its £727 million sale of its cash handling business to US rival The Brink in February, and has access to £1.1 billion.

Big Yellow Storage hiked its annual dividend and said custom had recovered somewhat from initial lockdown lows, but shares were off 4p at 1049p.