Johannesburg
– Listed Jasco Electronics Holdings says revenue in the first half declined as
it focuses on profitability.
In a
statement issued on Tuesday, the company says revenue came in at R521.1 million
in the six months to December, a 6.6 percent decline.
The group
also notes that exchange
rate volatility impacted this period negatively, with a R6 million swing from a
net foreign exchange profit of R2.1 million in the comparative period to a net
foreign exchange loss of R3.9 million in the current period.
Jasco notes
it does manage foreign exchange through a hedging programme, but this is
impacted by rand volatility when measuring the value of the financial
instruments at reporting dates.
Profit
before interest and tax was flat at R30.1 million, although its net operating margin
gained to 5.8 percent, from 5.4 percent.
Headline earnings per share gained 10.5 percent to 6.34c,
while earnings per share grew 9.6 percent to 6.28c.
“Management
maintained its focus on reducing stock levels where appropriate, improving
terms of supply from major trade partners, and improving debtors’ collections,”
it says.
CEO Pete da Silva notes, “in spite
of the difficult economic conditions in South Africa and the R6 million
negative impact on profits due to the volatile exchange rate during the period,
Jasco’s first half performance was pleasing”.
Da Silva says the benefit of focusing on improving margins
rather than revenue growth is evident in the results and profits in the
majority of its businesses improved.
Read also: Jasco reinstates dividend
However, Da Silva expects the difficult market conditions and
subdued growth in South Africa to remain, with higher than targeted inflation
levels and the risk of interest rate increases by the South African Reserve
Bank.
“We will continue our cost control in all areas of the
business, while remaining selective on the quality of gross margins on the
generated revenue. We will also concentrate on working capital management and
limiting gearing to a maximum of 50 percent.”
Jasco, which says it has a solid base with ongoing expansion
into the rest of Africa gaining momentum, will grow “responsibly” through
geographic and product diversification and bolt-on acquisitions to ensure
smaller businesses achieve the required critical mass.
“Our primary focus in the short-term will remain on
delivering sustained profits through this combination of organic growth and
carefully targeted acquisitions.”
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