Hewlett-Packard's UK profit soars fourfold amidst a decline in sales revenues
Hewlett-Packard (HP)'s UK division reported a significant increase in pre-tax profit for the financial year ending 31 October, 2024, despite a decrease in revenue. The new accounts, filed with Companies House, show that the division posted a profit of £97.6m, a substantial increase from the prior financial year's profit of £26.6m.
The decrease in revenue from £948.2m to £805.2m over the same period is attributed to a 15% fall in sales due to softened demand. However, HP's operating profit rose from £2m to £61m, due to a reduction in the expected credit loss provision against inter-company balances and lower restructuring expenses.
The significant increase in profit can primarily be attributed to disciplined execution, improving customer demand in more profitable segments, strategic acquisitions, and a favorable legal settlement. The company highlighted disciplined execution across its portfolio that drove exceptional revenue and profitability despite market challenges.
The shift to higher-margin products and services, such as hybrid cloud, AI, and networking, helped improve profitability even with some sales reduction. The recent acquisition of Juniper Networks strengthened HPE’s networking business, which carries better margins, contributing to stronger profit growth and improved earnings per share expectations.
A UK court awarded Hewlett Packard Enterprise (HPE) about £700m related to a long-running fraud dispute linked to the 2011 Autonomy acquisition. This one-off cash inflow boosted profitability significantly at the UK division.
HP is launching certain initiatives to generate revenue growth in future years. The American tech giant originally sued Lynch and Hussain for £3.7bn over claims they artificially inflated Autonomy's reported revenues, growth, and gross margins. Mike Lynch, the founder of Autonomy, was extradited from the UK to the US to face criminal charges in San Francisco, but was acquitted of all charges by an American jury in June.
The directors of HP recognize the importance of achieving a balance between long-term and short-term objectives for future profitability. The company continues with cost reduction programs that are believed to benefit HP in the future.
[1] The Register
[2] BBC News
[3] Reuters
[4] CNBC
- The strategic acquisitions and favorable legal settlement experienced by Hewlett Packard (HP) contributed to an increase in technology-driven business segments such as hybrid cloud, AI, and networking, resulting in enhanced finance profits.
- In the UK division, the significant increase in profit was due not only to the adoption of higher-margin products and services but also to a one-off cash inflow from a court award related to a long-standing fraud dispute over the Autonomy acquisition.
