Johannesburg - Computer distributor Mustek is again feeling a margin pinch as it notes its gross margin declined in the year to June.
The listed company notes this is because of a change in the products in its mix, which moved to to lower profitability items.
The lower margin also comes despite revenue growth of 11.5 percent, to R5.31 billion, which was driven by its Huawei enterprise solutions division, its Microsoft volume licensing offering, sustainable energy division and Rectron Australia.
It says in its results commentary that its gross profit margin declined from 13.8 percent, to 12.9 percent because it had a bigger mix of Huawei enterprise solutions and Microsoft volume licensing in its sales basket.
“Although the gross profit percentages achieved by these new lines of business are lower, their contributions to profit are expected to continue growing.”
In addition, the theft of inventory from its Midrand office also caused its margin to be affected as it took a net loss of R14 million. The company notes it has since upgraded security controls and is currently reviewing the quantum of the insured amounts.
Mustek’s headline earnings came in 24.2 percent higher at 125.05 cents per share, while basic earnings are 24.8 percent higher at 124.94 cents per share. Headline earnings per share are seen as a key indicator of financial performance as they strip out once-off and unusual items.
The group says, for the period ahead, it will continue to refine its broad-based ICT distributor status, and expects to see its Microsoft licensing business growing revenue and profit. Likewise, its Huawei enterprise solutions division, sustainable energy division, CCTV surveillance division and cabling products and services are all expected to add to profit.
“Our suite of products provides Mustek with the flexibility to switch focus to more profitable market segments. Recognising that desktop unit sales are in decline, we can push our strong variety of entry-level, mid-level and aspirational tablets.”
It adds big data - a term given to the sheer volume of information generated by the Internet and companies’ battles to grapple with it - will be a focus area.
The company also hopes to benefit from SA’s push towards paperless classrooms, noting it has been investing so it can provide solutions to this market for the past few years.
It adds it has also been appointed as a distributor for Lenovo’s ThinkServer. “Before, Mustek had not been a significant participant in this market and we have started ramping up operations to take advantage of the opportunity presented in the local market.”
The company declared a 35 cents dividend, up from 28 c a year ago.
IOL