Johannesburg - Verimark [JSE:VMK] reported headline earnings per share of 2.2 cents per share as part of the unaudited interim results for the six months to the end of August 2016, compared to a loss of 3.6c per share over the same period in 2015.
Revenue from continuing operations was up 0.5% to R184.4m and profit before tax was R3.9m compared to a loss of R4.8m in 2015.
The net asset value per share was 117.7 cents per share during the interim period compared to 107.6 cents per share in 2015.
Verimark said in a statement issued on Wednesday that, despite a tough retail environment due to weaker consumer demand, higher interest rates and negligible economic growth in South Africa, the group recorded improved profits for the first half of 2017.
As a result of the ongoing depreciation of the rand against the dollar, it became necessary for Verimark to increase selling prices in mid-February 2016. These price increases were greater than the prior year's increase implemented in February 2015, which impacted sales growth, but resulted in improved gross profit margins.
The group said that, as with all other South African importers, it continues to experience the negative impact of the devaluation of the rand against the dollar.
"Despite demanding external factors, the group remains focused on improving those internal factors over which it has control, including the increased rate of new product introductions, the continuation of stringent cost containment and improving operating efficiencies," it said.
The board has considered it prudent not to declare a dividend. Dividend payments will be reconsidered in accordance with the existing pay-out policy on completion of the current financial year.
Following the retirement of Dr James Motlatsi as board chair and independent non-executive director, the board appointed Mitesh Patel as board chair.
According to Verimark, the declining business confidence in South Africa is expected to continue beyond 2016.
"There are numerous negative domestic and external economic as well as political issues impacting the economy, leading in part to continued weakness in the rand. There remains a real danger that South Africa's economy could enter a recession, which is extremely concerning considering this may well precede an economic downgrade," the group said.
"Verimark will continue to place emphasis on increasing the pace of new products introduced, normalising margins that were eroded due to the weakening of the rand, maximising operational efficiencies as well as ongoing cost containment in the six months ahead."
Given the economic challenges and the uncertainty around the rand exchange rate, Verimark is exploring a number of diversification strategies locally, as well as internationally. In addition it is also testing the sourcing of locally produced products.
The group said it remains confident that the resilience of its business model and the overall talent of its people will bode well for the future.
Read Fin24's top stories trending on Twitter: Fin24’s top stories