Hudaco posts 11% profit increase

Johannesburg - Hudaco Industries [JSE:HDC], which specialises in the importation and value added distribution of industrial and security products, on Wednesday reported an 11% increase in its first half headline earnings per share to 377c from 341c previously.

Revenue for the six months to end May 2011 was 26% higher at R1.4bn from R1.1bn in the same period the year before.

Operating profit at R149m was 24% higher.

The gross profit margin at 39% is down 1% on last year, the change being mainly attributable to the different mix of businesses this year.

The company declared an interim dividend of 130c a share.

Hudaco said in the six months under review the markets it served continued their "weak and patchy recovery" from the global turmoil of 2008/9.

"Volume sales were about the same as last year and this was coupled with a decrease in prices resulting from continuing Rand strength," the company said.

The contribution from acquisitions, particularly FHS, which has been part of the group since September 2010, helped the group to post stronger earnings than would have otherwise been the case.

"The Japanese earthquake did affect some of our suppliers, but not materially, and all were back to normal production within a few weeks. Hudaco's large stockholding also acts as a buffer against supply interruptions, so we do not anticipate any meaningful stock shortages resulting from the disaster," the company said.

In the past 12 months Hudaco has acquired four businesses for a total cost of R565m of which R262m has already been paid and R303m is still to be paid over the next two to three years and is dependent on earn-out performances.

The company had R101m net cash on hand at May 2011.