CAPE TOWN - Mustek lifted revenue 11.3percent to R3.01billion in the six months to December 31 due to strong growth in the Mecer brand and new products and services added to the portfolio in recent years.
“The strong trading performance demonstrated Mustek’s resilience and the defensive nature of the markets in which the group trades,” directors said on Friday. The share price fell 4.76percent to R7.80 on the JSE on Friday, before closing at R8.19.
Mustek is one of the largest assemblers and distributors of PCs and computer information technology products in South Africa.
Operating profit was flat at R116.47million. The gross profit percentage was lower over the same period a year before at 14.4percent (15.2 percent), but higher than the 14percent at the 2019 June year-end, mainly as a result of product mix.
Foreign exchange losses were limited to R6.5m (R11.3m), in spite of the volatile rand-dollar exchange rate, due to hedging.
Distribution, administrative and other operating expenses rose 7.8 percent. Excluding the profit on the sale of property in the comparative period, the increase was 4.8percent.
Net finance charges increased from R46.8m to R55.5m, partly due to the adoption of IFRS 16.
Headline earnings per share increased 9.1percent 75.79cents.
Basic earnings per share, at 75.72c, were down 3.2percent. Net asset value per share increased 8percent (1 540.43c).
The big slide in cash from operations to R5.2m (December 31, 2018: R194m) was mainly due to a reduction in inventory levels, the directors said, adding: “Management continues to focus on optimal working capital management.”
YOA, an associate company that makes fibre optic cable, contributed positively to share of profit from associates. Although Rectron’s contribution was down, its prospects remained positive after adding HP Printers, Zebra and DJI Enterprise to its product range after the period end.
Investments in new product lines such as networking equipment, sustainable energy and fibre were starting to contribute meaningfully to revenue and profit. Growth in fibre to the home was assisting fibre sales and also increasing demand for new devices to benefit from faster internet speeds.
Contributions from products such as Huawei were expected to continue growing, and although the gross profit margin might be lower for these products, net profit should increase, directors said.
The smart education and learning market was expected to grow as more education institutions realised the importance of digitisation.
The declaration of cash dividends would continue to be considered by the board, with an evaluation of current funding requirements and opportunities to repurchase shares.