Information and communications technology (ICT) group EOH expects to report a lower operating profit and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the six months ended January 31 – the first half of its 2024 financial year.
The group's operating profit for the period is estimated at R5-million to R15-million, compared with the operating profit of R142-million reported for the six months ended January 31, 2023.
Adjusted Ebitda is expected to be between R90-million and R105-million, compared with R171-million in the prior comparable period.
EOH further warns that its headline loss a share for the interim period is likely to be between 10c and 17c, compared with a headline loss a share of 17c in the six months ended January 31, 2023.
Its loss a share is also expected to widen to between 14c and 16c, compared with a loss a share of 3c reported for the prior comparable period.
EOH says challenging conditions persisted throughout the first three months of its 2024 financial year. While those conditions improved to some extent during the three months to January 31, revenue was still impacted on. This resulted in a 2% to 4% year-on-year decrease in revenue for the six months under review.
"The core Digital Enablement business, including International, has seen good revenue growth, however, this has been offset by reductions in other areas, particularly in the Operational Technologies division which has been negatively impacted by delays in closing public sector contracts and contracting delays with large mining customers.
"One of the major challenges facing the South African information technology industry is finding and retaining appropriately skilled talent. Accordingly, despite the impact on gross margins and overall profitability, EOH took the decision to retain highly skilled staff that were not fully productive, in anticipation of improved trading.
"Management believes this is the correct medium-term approach to resource an anticipated increase in activity appropriately," the group states.
EOH remains focused on reducing its operating costs and says it is on track to eliminate at least R50-million from the 2023 financial year cost base.
The group will publish its interim results on March 26.
EOH's share price on the JSE fell by nearly 6% on March 13 after the company published its trading statement for the interim period.