Synergon Q1 Earnings Down 7%.

Hungarian IT services company Synergon Informatika Rt has reported a first quarter pre-tax profit down 7% at the equivalent of $471,000 on revenue that rose 64% to $11.57m. Synergon, which floated on the Budapest stock exchange on May 5, while its Global Depository Receipts debuted two weeks earlier in London (CI No 3,649), blamed interest charges and foreign exchange losses for downturn in its pre-tax profit.

Operating profit actually increased 91% in the first quarter, reaching $733,000, but the negative impact of the added cost of interest on loans resulted in expenses of $267,000 through March this year, compared to additional income of $120,000 in the same period in 1998. Synergon said the increased costs were the result of a higher need for short-term loans, which it attributed to "the higher working capital requirement due to longer contracts" as well as higher sales activity. It added that it intends to use part of the funds raised by the IPO  (approximately $20m), to retire part of its debt, thereby reducing its interest costs in the coming months. Figures converted at 225 forints to the dollar..