JSE-listed Jasco Electronics on Tuesday delivered what it called a “pleasing” first-half performance amid difficult economic conditions and a negative impact from the exchange rate.
The group achieved nearly double-digit earnings growth during the six months to December 31, which it attributed to an enhanced focus on improving margins rather than on revenue growth.
During the six-month period under review, headline earnings a share rose 10.5% to 6.34c and headline earnings increased by 10.7% to R14.2-million, while earnings a share ticked up 9.6% to 6.28c apiece.
Profit for the first half of the year grew 6.5% to R15.2-million.
Revenue was down 6.6% to R521.1-million, in line with Jasco’s “more bottom-line focus”, with revenue decreases reported in the Carrier, Enterprise and Intelligent Technologies units.
The group’s Electrical Manufacturers unit reported a strong performance for the first half of the year on the back of a diversification strategy and new customers adding to volumes.
The unit achieved strong revenue growth of 24.9% to R102.5-million, an increase in operating profit from R6.3-million in the six months to December 2015 to R8.5-million during the six months under review and an improvement in the operating margin to 8.3%, from 7.7% in the prior corresponding period.
An 18.1% contraction in revenue to R83.8-million was experienced in the Intelligent Technologies unit as a slowdown in project spend from major customers impacted volumes in power and renewable-energy solutions.
Operating profit remained flat at R9.6-million, with an improvement in the operating margin to 11.4% in the six months to December 2016, compared with 9.3% in the prior corresponding period last year.
Jasco noted that progress was being made in the Enterprise business, and while revenue decreased by 2.4% to R147.9-million, owing to the planned termination of an unprofitable security contract with a major financial institution, operating profit for the period under review more than doubled to R3.9-million.
In addition, the unit’s operating margin improved from 1.1% to 2.7%, owing to significant savings in the cost base offsetting the impact of the lower sales volumes achieved.
Meanwhile, the Carrier business disappointed with 15.7% lower revenue, at R191.2-million, with reduced spend by the major telecommunications operators due to consolidation in the market.
This business was worst affected by the volatile exchange rate, Jasco pointed out.
This resulted in a loss of R3.1-million, compared with a profit of R5-million in the corresponding prior period last year, resulting in a 21.3% decrease in operating profit to R24.8-million, with an operating margin of 12.9%.