Investment holding company Invicta reported disappointing results for the year ended March 31, owing to difficult economic and trading conditions that culminated in the group posting a 17% year-on-year decrease in operating profit.
Group CEO Charles Walters said the results reflected the markets served by the group’s diverse businesses, which all proved to be extremely challenging.
“The past year was characterised by a further dramatic weakening in mining and construction activity in Africa and South-East Asia. We were further impacted by the deterioration in industrial and manufacturing activity in South Africa and a severe drought, the strongest El Niño on record, which gripped the Southern African region and suppressed the agricultural industry,” he said.
Net asset value per share increased by 9% year-on-year to R44.86.
The group reported a 39% decrease in cash generated from operations from R979-million to R594-million as a result of a modest decline in earnings before interest, taxes, depreciation and amortisation being exacerbated by a significant investment in working capital caused by the substantial weakening of the rand during the period under review.
Revenue for the company’s engineering consumables segment was up by 2% from R4.21-billion to R4.3-billion. The segment’s operating profit declined by 19% to R406-million, resulting in an operating profit margin of 9.4%.
The capital equipment segment reported a 3% decrease in revenue from R4.61- billion to R4.48-billion, mainly as a result of the drop in agricultural equipment and construction equipment sales volumes.
The South African business’ operating profit declined 21% to R362-million from R457-million the previous year.
The building supplies segment’s revenue increased by 12% from R1.64-billion to R1.84-billion.
Exports into Africa grew by 22%. Significant pressure on gross margins and difficulties experienced in the plastic pipe factory in the earlier part of the year resulted in operating profit decreasing by 14% to R75-million from R87-million and the operating profit margin decreasing to 4.1% from 5.3% in the comparable period.
“While there are signs of improvement in certain areas of the business, we are expecting trading conditions to remain challenging in the year ahead and we will continue to focus on margin management, cost control and working capital optimisation,” Walters said.