Johannesburg - Jasco Electronics on Thursday reported diluted headline earnings per share of 9.7c for the six months ended December 2009, down 53% from the 20.6c for the six months ended August 2008.
The company changed its year end from February to June during 2009, and the results for the six months ended December 2009 are compared to the six months ended August 2008.
Revenue increased by 6% to R264m, while operating profit decreased by 34% to R16.1m. Profit attributable to ordinary shareholders declined by 28% to R11.2m.
The company said as previously reported the market downturn was first felt within the durable goods industry, which impacted negatively on the domestic products division.
During the six months under review, the position improved slightly, with this division increasing volumes and operating profit. However, the Security division saw 65% of its project pipeline cancelled or delayed and revenue for this period does not include any major contracts.
Telecommunications maintained its position in the wireless arena in South Africa, but saw roll-out delays in the rest of Africa and a further decline in local expenditure on fixed line networks.
The group's associate, M-TEC, continued its turnaround, turning the loss of R0.6m for the six months to December 2008 into a profit of R2.9m. The acquisition of 51% of Lighting Structures further contributed to the profits of the Electrical division.
On a comparative December 2008 to December 2009 basis, Telecommunications revenue declined by 11% to R175m and operating profit declined by 26% to R17.9m, due to a continued decline in fixed line spend and slower wireless roll out in the rest of Africa.
Looking ahead, Jasco said it enters the next six months with all its divisions in a profitable position.
"The last six months have been an opportunity to invest in key people and to focus on efficiencies. This will assist Jasco in buffering the expected continuation of negative markets," it said.
The group expects continued pressure over the short term in telecommunications. However, to counter this, management will focus on the reduction in overheads and tight cost management. The outlook over the longer term remains positive, as low penetration in Africa will necessitate spend on voice and data.
Although Security will continue to experience project delays due to market pressure, its business model will continue to cover overheads.
Management has implemented a more formalised sales network to drive annuity and recurring income, as well as further cost-cutting and efficiency programmes without losing capacity for an eventual upturn. The group will also focus on expanding its product range and diversifying its service offering, it said.
Domestic Products should continue to see an improvement. Although job cuts that occurred during 2009 will pressure consumers, a gradual increase is expected on the back of current lower interest rates.
In electrical, Jasco will continue to focus on costs and efficiencies. The project flow appears more positive, with orders placed on M-TEC for the next 12 months under an existing aluminium overhead conductor contract.
"Jasco has a focused medium- to long-term growth plan in place, with a clear strategy being driven by the senior management team to enhance organic growth and to bulk up. Although market visibility remains unclear, management is focused on taking pro-active action to protect profitability and grow the group," it concluded.
- I-Net Bridge